Stocks End Week Higher, Employment Report Beats  Image: Shutterstock After a few big swings both up and down on Friday, stocks closed narrowly mixed with the Dow and the S&P modestly lower, while the Nasdaq ended modestly higher. But all of the indexes finished solidly higher for the week with the Dow up 0.77%, the S&P up 1.94%, and the Nasdaq up 4.56%. And since the market put in their lows 4 weeks ago, the Dow is up 4.72%, the S&P is up 6.34%, and the Nasdaq is up 9.29%. All of the indexes are still down significantly from their highs. But the lows have held so far. And we've seen a decent bounce so far. The big news on Friday was the Employment Situation report which came in better than expected with 372,000 new jobs created last month (381K in the private sector and -9K in the public), vs. the consensus for 270,000 (228K private and 42K public). The unemployment rate held steady at 3.6% as expected. Although the participation rate ticked down to 62.2% vs. last month's 62.3% and views for the same. All in all, it was a another solid report. The industries with the biggest job gains were: Professional and Business Services with 74,000 new jobs; Leisure and Hospitality with 67,000 (with Food Services and Drinking Places accounting for 41,000 of that); Health Care was up by 57,000; Transportation and Warehousing rose by 36,000; Manufacturing increased by 29,000; Information Services gained 9,000; Social Assistance Services added 21,000; Wholesale Trade was up by 16,000; and Mining was up by 5,000. With the jobs report out of the way, the market will turn its attention to this week's CPI report (Wednesday, July 13th), where we'll get another look at inflation. Some are speculating the report could show inflation having peaked with oil, natural gas, and other commodities falling over the last several weeks. While inflation is currently at a 41-year high, it's unlikely to show a meaningful decrease in this next report, assuming we even see one. But just not going any higher would be a win, and a step in the right direction. But, of course, it could very well tick up even higher. So everyone will be watching that report closely. As it stands now, the Fed is expected to raise rates by 50-75 basis points when they conclude their next 2-day FOMC meeting on July 27th . While the uncertainty over the size of the next hike is a concern, the real interest is in what the Fed sees after that. Are they forecasting more 50 basis point hikes? Or even 75 basis points hikes? Or will they fall back to 25 basis point hikes? Or maybe pause for a while to see how the previous hikes are impacting everything? That's the real question on the minds of Fed watchers. In the meantime, we are, once again, at the beginning of another earnings season. And since stocks typically go up during earnings season, we could see more upside for the markets in the coming weeks. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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