2023 | July 10

The Market

Stocks Drop

The major indexes failed to maintain the previous week’s positive momentum as the S&P 500 and the NASDAQ slipped around 1% and the Dow fell nearly 2%. Stocks declined on Thursday amid growing concerns about tightening monetary policy, and a brief rally that followed Friday’s jobs report reversed course in the afternoon. 

Renewed worries about the outlook for more interest-rate increases sent yields of U.S. government bonds higher for the second week in a row. The yield of the 10-year Treasury bond climbed to 4.05%—the highest level in four months—and the 2-year note briefly eclipsed 5.00% on Thursday before setting below that threshold on Friday.

After exceeding the consensus forecast of economists for 14 months in a row, the U.S. labor market fell modestly below expectations in June. Employers added 209,000 jobs—short of expectations for around 240,000—to record the smallest monthly gain since December 2020. The unemployment rate slipped to 3.6%.

Expectations are low heading into earnings season, which opens this week as major banks begin reporting second-quarter results. As of Friday, analysts surveyed by FactSet were expecting companies in the S&P 500 to post an average earnings decrease of 7.2% compared with the same period a year earlier—the biggest earnings decline since the second quarter of 2020.  

Wednesday’s release of minutes from the U.S. Federal Reserve’s mid-June meeting reinforced expectations that we’re likely to see further interest-rate increases this year. The minutes showed that a majority of Fed officials expected there would be a need for further hikes, and some nonvoting members wanted to continue raising rates at their June meeting, rather than pause the rate-hiking cycle.

Companies in the S&P 500 reduced their dividend payments in this year’s second quarter, snapping a string of seven consecutive quarterly increases, according to S&P Dow Jones Indices. Companies in the S&P 500 paid out $143.2 billion in dividends, down from the record $146.8 billion in this year’s first quarter.

Supply cuts by some major oil-producing countries provided a lift for oil prices for the second week in a row. U.S. crude was trading at nearly $74 per barrel on Friday, up more than 4% for the week and almost 7% higher than its price a couple weeks earlier.

A Consumer Price Index report scheduled to be released on Wednesday will show whether the recent moderation in inflation extended into June. While inflation as measured by CPI rose at an annual 4.0% rate in May, core inflation was 5.3% excluding typically volatile costs such as energy and food. 

Source: John Hancock Investment Management

A Look at the Long Term

It's Old Fashioned

From cuff-and-collar boxes to floppy disks, the accoutrements of “modern” life change over time. Gadgets and gizmos that were once essential become obsolete as fresh, and often more efficient, options gain a following. See what you know about the way life used to be by taking this quiz.

1. Hand-cranked churns were an important tool in many households from the mid-1800s through the 1940s. What were they used for?

a. Drying clothes

b. Canning vegetables

c. Producing butter

d. Making wine

2. At the time of the Civil War, what was the most common form of communication?

a. Letters

b. Gossip

c. Newspapers

d. Telegraph

3. Patterns of holes in stiff paper proved to be quite valuable in various industries during the 1800s and 1900s. Some punched cards had the phrase “do not fold, spindle or mutilate” printed on them. What were punched cards used to do?

a. Automate weaving

b. Record and replay harmonium (pump organ) performances

c. Process business and government data

d. All of the above

4. Before computers and smart phones became ubiquitous, people used rotating card files to organize contact information. What were these devices called?

a. Spinfiles

b. Rotarchives

c. Rolodexes

d. spindexes

Bonus: The correct answer is a mashup of two words. What are they?

Answers: 1) c; 2) b; 3) d; 4) c; Bonus: Rolling and Index

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