✅ Written by Austin DeNoce, Markets Reporter, Walk-On Holdings

✅ Edited by Casimir Stone, Creative Director Walk-On Holdings

For the First Week In July, the Markets Will Be Watching…

…House of the Dragons, probably, as the economic calendar slows to a crawl ahead of the unofficial kick-off of the second-quarter earnings season next week.

Jokes aside, the first week of July will be a very slow one when it comes to economic data and earnings reports. However, it brings with it several key insights into the state of U.S. businesses in the form of the Institute for Supply Management’s (ISM) Manufacturing and Services PMIs. 

The former — due Monday, July 1 — serves as a broad measure of manufacturing activity. The sector contracted slightly more than expected in May, signaling soft demand. However, output appeared stable. The Manufacturing PMI has shown contractions every month since October 2022, with the exception of this March.

On the flip side, the Services PMI — due Wednesday, July 3 — has expanded fairly consistently since the pandemic, contracting only briefly in December 2022, and again this April. But the sector bounced back in May, surging to its highest level in nine months. The report also showed pricing pressures eased from the month before while production and new orders climbed. 

Overall, these indices paint an optimistic portrait of U.S. businesses operating in an uncertain climate. Even within the contracting manufacturing sector, several insiders surveyed noted persistent demand. Early “flash” estimates from late June showed the Manufacturing PMI expanding to a three-month high, while the Services PMI hit its highest level in 26 months.

That said, ISM Chair Anthony Nieves noted that most business leaders still considered inflation and the high interest rate environment “an impediment to improving business conditions” — suggesting what one sector insider called a “minor slowdown” could escalate to “major” if the Federal Reserve does not initiate rate cuts soon.

Also on the economic calendar…

Monday, July 1

Aside from the Manufacturing PMI, no major economic data or earnings reports are due.

Tuesday, July 2

Several labor reports will roll in this week, starting with job openings.

The strength of the job market is a key piece of the Fed’s policy puzzle. Strong data, while good for American workers, will make the central bank more reticent to ease its fight against inflation. On the flip side, weaker-than-expected jobs reports might encourage the Fed to cut interest rates sooner than later.

Wednesday, July 3

Constellation Brands — the owner of Corona, Modelo, and Pacifico’s U.S. businesses, as well as several spirit brands like Svedka vodka — will report, the only major earnings of the week.

Thursday, July 4

The jobs data will continue coming in with initial jobless claims, a key unemployment metric. The number of Americans claiming unemployment benefits climbed unexpectedly last month.

Friday, July 5

The week will end with the monthly update to the unemployment rate, which ticked above 4% in May for the first time since January 2022. We’ll also get nonfarm payrolls, a measure of the jobs added by the U.S. economy in June.