Keep an Eye on Congress and Friday's Unemployment Report

Monday, August 3, 2020 4:36 PM | Bobby Raines

Aug. 3, 2020 - This week, like so many others recently, is as much about things not on the calendar as things on the calendar.

On the calendar are a couple of economic reports, most importantly the July Employment Situation Report, which is scheduled to be released Friday. Analysts, on average, are still expecting the economy to have added jobs last month, although after the last several weeks of initial and continuing unemployment claims numbers, some now think it is possible the economy lost jobs in July.

The mean estimate is for 1.6 million new jobs, down significantly from the 4.8 million added in June. That would pull the unemployment rate down to 10.5%, which is still higher than at any point during the financial crisis. Average hourly earnings expected to fall again as low-wage workers are returning to the workforce after temporary layoffs.

Purchasing manager's indexes are also being released this week. We got manufacturing numbers from Markit and the Institute for Supply Management this morning, both showed some expansion in the manufacturing sector last month, although the manufacturing sector is a relatively small part of the economy. Reports on the much-larger non-manufacturing part of the economy is scheduled for Wednesday.

These numbers are interesting, but unemployment above 10%, the next most important thing that can happen in markets this week is some sort of deal from Congress on an economic rescue package. Expanded unemployment benefits, which have been widely credited with keeping consumer spending high, have expired. This means that millions of Americans are facing monthly bills on unemployment that may pay about 45% of their previous income.

With the Senate scheduled to be on vacation from from the end of this week until Sept. 7, lawmakers need to work quickly to reach a deal. Failure to do so will have consequences ranging from a sharp drop in the consumer spending that powers the economy, to a sharp increase in homelessness as eviction moratoria expire.

A deal will likely spark a rally. Failure to reach a deal may lead to some short-term volatility, but since so much of the gains posted by major indices recently is attributable to just a handful of giant companies, a no deal scenario could be bad for parts of the economy, while leaving the headline numbers in the stock market relatively unchanged.

There are still lots of earnings reports on the calendar, which will be consequential for holders of those stocks, but most of the companies that have the ability to move the entire market with a beat or a miss have already reported.

Economic Events this Week

Tuesday
  • 10:00 a.m. - Factory Orders
Wednesday
  • 8:15 a.m. - ADP Employment Change
  • 10:30 a.m. - EIA Crude Oil Inventories
Thursday
  • 8:30 a.m. - Initial Claims
  • 10:00 a.m. - ISM Non-Manufacturing Index
Friday
  • 8:30 a.m. - Nonfarm Payrolls
  • 8:30 a.m. - Unemployment Rate
  • 10:00 a.m. - Wholesale Inventories
  • 3:00 p.m. - Consumer Credit

Earnings Reports this Week

Tuesday:

Before the bell: ATI, AMRN, AMCX, ARMK, ARCC, TECH, BP, CNK, CYBR, DEA, EPC, ESI, EMR, EXC, EXPD, FIS, IT, HSIC, INCY, IGT, KKR, LEA, LDOS, TREE, LPX, MGP, NS, PRIM, RL, SPR, BLD, TDG, USCR, USFD, VMC, WRK After the bell: ATVI, ALSN, ALL, AFG, ANET, AIZ, EQH, BYND, BMRN, BOOT, CLDX, CNO, CMP, DK, DVN, ENPH, ETH, EVTC, EXR, FNF, FOXA, GRES, GLUU, GDOR, INGN, JAZZ, KTOS, LC, LMNX, MCHP, MNST, NEWE, NUVA, OMI, PLMR, PAYC, PXD, PAA, PLNT, PUMP, PRU, QGEN, RGA, SUPN, TX, TWLO, UPWK, VRSK, DIS, WU, WW, WYNN

Wednesday:

Before the bell: ABC, ARES, ATH, AVA, BCOR, BWA, BV, FUN, CRL, CLH, CVS, DISCA, ERJ, ENR, FVRR, ROCK, HEP, HZNP, HUM, IONS, LL, MTG, MRNA, NYT, NXST, NLSN, NI, DNOD, ODP, BTU, PRGO, REGN, SRE, SBGI, SSYS, TEVA, TRU, W, WEN After the bell: DDD, ACAD, ADT, ADTN, ALRM, ALB, DOX, UHAL, AEL, AWK, ANSS, ARNA, ATO, BTG, BLDP, BNFT, CCMP, CWH, CVNA, CTL, CF, XEC, CPA, CXW, CTVA, DAR, ELF, ENDP, ET, PLUS, WTRG, ETSY, RE, FSLT, FISV, FOXF, FNV, FTDR, GMED, GDDY, HR, HI, TWNK, HUBS, IAG, JACK, KBR, LHCG, LNC, LYV, MFC, MRO, MBI, MET, MWA, NUS, NUAN, OLN, PAAS, PTON, PSA, KWR, RYN, RCII, ROKU, SILK, SONO, SQ, STAA, SUN, SPWR, TRMB, TWO, VSLR, VOYA, WELL, WDC, ZNGA

Thursday:

Before the bell: AAON, ACIQ, ADNT, AES, ALNY, AEP, BLL, BHC, BDX, BMY, CNQ, CAH, LNG, CWEN, CCOI, COMM, XRAY, EPAM, EXLS, FLIR, GTN, HL, HLT, HIMZ, HFC, HII, IHRT, INSM, IDCC, IRM, IRWD, KTB, LAMR, LAUR, LXP, MMS, MUR, MYL, NICE, NOMD, NCLH, PZZA, PH, DOC, PNW, PLUG, PBH, QSR, STNG, SEE, SERV, STGP, TEN, MEET, THS, VGR, VIAC, VSTO, VG, WLK, WIX, YETI, ZTS After the bell: AL, AYZ, AMBC, AMH, AINV, AGO, BECN, BL, BKNG, EPAY, BHF, CBR, CZR, ELY, NET, ED, CUBE, CWK, DDOG, DIOD, DBX, DXC, EOG, EB, EXEL, FGEN, FSLR, FLT, FLO, FTNT, G, GPRO, GRPN, GWPH, HLF, ILMN, MAIN, MTW, MHK, NWSA, NDLS, NLOK, PCTY, PBA, POST, PRAA, RPD, RMAX, RSG, SWI, SLF, SVMK, TMUS, TLND, TDS, TDC, REAL, TTD, TIVO, TRIP, TRUE, UBER, OLED, USM, WCN, YELP, ZG

Friday:

Before the bell: CSIQ, CNNE, ROAD, UFS, TILE, KIM, MGA, NWN, SABR, VTR, VIRT

Sector and Industry Sentiment

As part of the upgrade and redesigned InvestorsObserver, we are now calculating a proprietary Sentiment Score for stocks. This score looks at price action, volume trends and data from the options market when available to try to get a sense of how the market feels about a stock. We're replacing the lists of sectors and industries that have performed well or poorly over various time periods with a ranking of all eleven sectors in order of sentiment and then the top ten and bottom ten industries.

Sector Sentiment

Technology

Real Estate

Communication Services

Utilities

Financial Services

Basic Materials

Consumer Defensive

Industrials

Consumer Cyclical

Healthcare

Energy

Top Industries

Electronics & Computer Distribution

REIT - Industrial

REIT - Healthcare Facilities

REIT - Residential

Software - Infrastructure

Internet Retail

Insurance Brokers

Asset Management

Personal Services

Utilities - Regulated Electric

Bottom Industries

Oil & Gas Integrated

Paper & Paper Products

Coking Coal

Chemicals

Shell Companies

Banks - Diversified

Building Materials

Travel Services

Luxury Goods

Airlines

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