The recent US labor data released by the Bureau of Labor Statistics showed an increase in Non-Farm Payrolls for June, beating forecasts. However, government hiring accounted for a significant portion of this increase, with lower revisions for May and June. Wage growth was in line with expectations, showing a 0.3% increase month-on-month and a 3.9% increase year-on-year.
Tech-heavy indices outperformed the broader market last week, with the Nasdaq 100 leading the gains. In contrast, the Dow struggled to make significant gains. Treasury yields pulled back following the release of the softer labor data, with the 10-year yield moving away from intraweek highs.
Looking ahead, key data releases include the Consumer Price Index (CPI) readings for June, which are expected to show a slight drop in year-on-year headline growth. Additionally, earnings reports from financial heavyweights like JPMorgan Chase, Citigroup, and Wells Fargo will be closely watched.
In terms of technical analysis, the Dow has been facing challenges in gaining momentum compared to other indices. The weekly time frame shows a ‘bull average’ overview, while the daily time frame suggests ‘cautious consolidation’. Retail and institutional sentiment for the Dow has shown a shift towards selling bias, with both IG clients and institutional investors taking a more bearish stance.
Overall, the market is awaiting key data releases and earnings reports to provide more clarity on the economic outlook. The performance of the Dow, along with tech-heavy indices, will continue to be closely monitored in the coming weeks.