Navigating the Economic Wave: A Forecast of Job Reports, Bank Developments, and Tech Sector Highlights
July 2, 2023
As the 4th of July festivities wind down, a series of pivotal economic releases await to shape investor sentiment. Construction spending, factory orders, and initial jobless claims will set the stage before the keenly-anticipated June jobs report is unveiled on July 7. Analysts predict an encouraging addition of 213K jobs during June, nudging the unemployment rate slightly downward from 3.7% to 3.6%. Average hourly earnings are also projected to increase – 0.3% on a monthly basis and 4.2% year-over-year.
Banking Sector: Post-Stress Test Revelations
The ensuing week will find major banks under intense scrutiny after their successful navigation through the Federal Reserve’s rigorous stress tests, designed to mimic severe recession conditions. A majority of the large banks are anticipated to raise their dividends. However, analysts predict a quieter period for share repurchases until the direction of the economy becomes clearer.
Key players such as Bank of New York Mellon (BK), JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Goldman Sachs (GS), Morgan Stanley (MS), Truist Financial (TFC), Citigroup (C), and State Street (STT) are expected to make significant capital allocation decisions in the limelight. According to Seeking Alpha analyst Logan Kane, while these major banks are likely to weather the storm, potential failure looms for dozens of smaller banks over the next 12-18 months due to risky real estate loans and declining deposits.
Technology Sector: An Apple and Tesla Spotlight
In a week relatively sparse on calendar events, the technology sector could seize major headlines, thanks to Apple’s (AAPL) flirtation with a $3T market cap and Tesla’s (TSLA) forthcoming Q2 deliveries report. Given the circumstances, these events are likely to attract disproportionate attention in the economic discourse.