TECH EARNINGS THIS WEEK AND THE MARKET DIRECTION

DJIA 52-wk: +14.38% YTD: +6.89% Wkly: +0.72%?

?S&P 500 52-wk: +21.35% YTD: +15.41% Wky: -1.97%

?NASDAQ 52-wk: +26.32% YTD: +18.09% Wkly: -3.65%

?SPDR S&P Bank ETF: 52-wk: +29.21% YTD: +13.04% Wkly: +6.18%

?

FRIDAY’S MOVES:

Came as a major outage disrupted flights, banks and even doctors’ appointments around the world.? Cybersecurity firm CrowdStrike said the issue believed to be behind the outage was not a security incident or cyberattack and that it had deployed a fix.? The company said the problem lay in a faulty update sent to computers running Microsoft Windows.? CrowdStrike’s stock dropped 11.1%, while MSFT lost 0.8%

TUESDAY S&P 500 SET ITS LATEST HIGH:

Big tech stocks that have been the market’s biggest winners, amid criticism they simply grew too expensive, NVIDIA, for example, is still up 138% this year amid a frenzy around AI technology, even after falling 2.6% on Friday and 8.8% over the week.?

Government Hiring Helped Prop Up the Job Market. Now It’s Set to Slow:

Public sector hiring helped fuel the growth of US payrolls in the past few years, but now looks set to slow. Other sectors of the economy are unlikely to compensate for diminished government job growth, suggesting the once-red-hot labor market will continue to cool. A pullback by government would be one more negative development as the Federal Reserve shifts its focus from inflation to the full-employment side of its dual mandate. Unemployment has ticked up to 4.1% from 4% in May and is up from a historical low of 3.4% in April 2023. Weekly claims for unemployment insurance have been rising, along with long-term unemployment, and temporary staffing has declined. All have been leading indicators of hiring trends in the past. While employment remains healthy for now, Fed Chair Jerome Powell has said the labor market is no longer overheated. The government sector added more than 607,000 workers to the nation’s nonfarm payrolls in the past year, or nearly a quarter of all net new jobs. In June, it accounted for 34% of total payroll gains, with healthcare a sizable second, at 24%.

While the healthcare sector still has vacancies to fill, government recruiting is running out of steam, with fewer open positions and less money to spend. What’s more, the government’s outsize contribution to headline payroll numbers has obscured slower hiring elsewhere in the market. “If government hiring steps to the side, there is a risk that the unemployment rate could move up more than it already has,” says Michael Feroli, chief US economist at J.P. Morgan. Much of the recent growth in government employment, particularly at the local level, has been driven by “catch-up hiring” after staffing levels were left too low following the Covid-19 pandemic, Feroli says. The private sector’s labor recovery from the initial effects of Covid-19 started in June 2020; government hiring took off nearly a year later. The delayed recovery was due, in large part, to the fact that public education is a primary driver of municipal job growth. Many schools and state universities maintained remote and hybrid scheduling options throughout 2020 and into 2021, and required minimal staffing additions. Also, the shortage of workers prompted many private-sector employers to raise wages in 2021 and 2022. Federal, state, and local agencies were slower to respond, and found it challenging to recruit and retain workers.

Once government began hiring, payroll gains were bolstered by a surge in municipal tax revenue in 2021 and 2022, says Paul Ashworth, chief North America economist for Capital Economics. The increased revenue, paired with federal stimulus funds, helped many state and local governments step up hiring over the next two years. Now, Feroli says, the US is “past the peak in trend job growth in the government sector.” The government sector recovered fully in June from pandemic-era job losses, says Olu Sonola, head of US economic research at Fitch Ratings. Additionally, state and local governments are facing budget challenges again, which likely will suppress future hiring. Roughly half of Americans live in states that reported budget shortfalls as of late 2023, reports Pew Charitable Trusts. They include California, New York, and Pennsylvania.

Municipal revenue tends to be a leading indicator of hiring, Sonola says, adding that a change in revenue precedes a change in employment by about a year. Sonola expects a significant softening in government hiring by the end of the year. But the turning point could come at any time, he says.

?

Greatest Bubble’ Nearing Its Peak, Says Black Swan Manager

?Universa’s Mark Spitznagel, who has made billions from past crashes, sees last hurrah for stocks before severe reckoning https://emailshare.cmail19.com/t/n/d-l-2f9f5e7146c711efb753e3ea39caa660-l-t-r-l/?

?

THIS WEEKS INTERESTING SECTOR PIECE IS TECH:

This was a terrible week for tech, anyway you slice it.? The Nasdaq Composite saw its worst day in two years. The six largest companies in the market, all tech names, make up 30% of the S&P 500.?

Four names—GOOG, AMZN, META and NVDA—will generate earnings growth of 56% in the second quarter, according to FactSet estimates.?Without them, the S&P 500’s growth could be a more pedestrian 5.7%.

And keep in mind those are still estimates.? Last quarter, the same four names drove growth of 132%.?Subtract them from the S&P 500 and the index’s aggregate earnings fell 1.2%.?

Tech earnings will probably decide the near-term fate of markets.? ??

?Richie

DISCLAIMER:

This content (“Content”) is produced by Richard Naso. The Content represents only the?views?and opinions of Mr. Naso who is compensated by TradeZero for producing it. Mr.?Naso’s trading?experiences and accomplishments are unique, and your trading results may?vary substantially?from his. TradeZero does not endorse the Content and makes no?representations or warranties with respect to the accuracy of the Content or information?available through any referenced or?linked third party sites. The Content has been made?available for informational and educational?purposes only and should not be considered?trading or investment advice or a recommendation?as to any security.

Trading securities?can involve high risk and potential loss of funds.?Furthermore, trading on margin is for experienced investors and traders only as the amount you?may lose can be greater than?your initial investment. Likewise, short selling as a securities?trading strategy is extremely?risky and can lead to potentially unlimited losses. Options trading is?not suitable for all?investors as it can involve risk that may expose investors to significant losses.?Please read?the Characteristics and Risk of Standardized Options, also known as the options?disclosure?document (ODD) at OCC - Options Disclosure Document before deciding to engage in options trading.

TradeZero provides self-directed brokerage accounts to customers through its operating?affiliates: TradeZero America, Inc., a United States broker dealer, registered with the?Securities and Exchange Commission (SEC) and member of the Financial Industry?Regulatory?Authority (FINRA) and the Securities Investor Protection Corporation (SIPC);?TradeZero, Inc., a?Bahamian broker dealer, registered with the Securities Commission of?the Bahamas; and?TradeZero Canada Securities ULC, a Canadian broker dealer, member?firm of the Canadian Investment Regulatory Organization (CIRO) and member of?the Canadian Investor?Protection Fund (CIPF).