Week of August 8, 2022

Stock futures rise this morning following the S&P 500’s third winning week in a row, capped off with a huge jobs report last Friday.  While the market was expecting 250,000 workers to return to the job, the report showed a surge of 528,000 jobs which has eased some recession fears.  The resilient labor market also signaled that the economy could withstand more rate hikes from the Federal Reserve. 

“Markets are still digesting the payroll report from Friday.  When you see what’s happening in the labor market, this doesn’t look like a recession in the sort of broad sense,” said Kiran Ganesh, a multiasset strategist at UBS. “Investors seem to be in the mood to listen to the good news.” 

A new reading of the consumer price index, slated for release Wednesday, will give investors more clarification about the central bank’s next move at its policy meeting in September.  Analysts are now pricing in a higher likelihood of a 0.75% hike next month, which would be the third straight increase of that magnitude.  Headline CPI, which includes volatile food and energy prices, is expected to dip to 8.7% in July from a 40-year high of 9.1% in June, according to Dow Jones estimates.