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Pre-Markets Sluggish Ahead of Long Weekend, Kicking Off 2H

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Friday, July 1, 2022

We start a new half of the trading year with one normal session followed by a long three-day weekend in the U.S., commemorating the 4th of July Independence Day holiday. In it, following the worst first half (1H) of trading since 1970, we see pre-market futures in the red — again.

Trading volume is not expected to amount to much today, thus our current -52 points on the Dow, -44 on the Nasdaq and -10 on the S&P 500 is not expected to move the needle much in today’s session. For sure, regardless what happens today, not much of a dent is expected to have been made to a Dow -15.9% year to date, the S&P -21%, the small-cap Russell 2000 almost -25% and the Nasdaq down a whopping -30.3%. At least not today.

Looking for a silver lining? As bad as 1H 2022 was, remember it began its first session of the year not only at cycle highs, but all-time highs. So obviously you can only garner so much information from a day or two of trading. That we’re starting out lower to start the 2H says more about current market trends than it does where the markets might be headed.

And where it might be headed still has a chance to work out well: if China comes back online without too much drama (although that may be a bit much to ask: check out President Xi’s comments on the 25th anniversary of the re-annexation of Hong Kong) and somehow energy supply efforts can make up for what we’re losing from the Russia boycott, there’s a possibility the U.S. economy might reduce inflation to necessary levels without tanking into recession.

After today’s opening bell, we get PMI and ISM Manufacturing prints for June — both of which are expected to moderate a bit from previous levels. Also, Construction Spending for May is expected to pick up a tad from the +0.2% posted for April. Talk about not moving the needle, these won’t do it, either. But count this data as accumulative toward the greater understanding of our present economy, or at least one of our very recent past.

Next week we get the big monthly jobs totals for June, plus Factory Orders, PMI and ISM Services, a new JOLTS report and, of course, weekly jobless claims. We hope we are able to rise from the mat after our 1H beat-down; stronger-than-expected economic data would go a long way in establishing our ability to do this.

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