At last the markets and the Federal Reserve appear to be agreeing on something\u2014a soft landing for the U.S. economy.<\/p>\n
Minneapolis Fed President Neel Kashkari said Sunday the central bank now thinks it can steer the economy to a so-called soft landing. That would entail bringing down inflation to the 2% target without causing a recession.<\/p>\n
The Fed\u2019s preferred inflation metric Friday gave the stock market more reason to be upbeat, as the core personal consumption expenditure index fell to an annual 4.1% in June.<\/p>\n
It\u2019s been a jubilant July for the S&P 500, the index is up 3% for the month and 19% for the year so far.<\/p>\n
But\u2014and it\u2019s a fairly big but\u2014core PCE inflation is still more than double the target and more rate hikes could well be ahead, which could puncture the buoyant mood.<\/p>\n
The bond market appears to think so. Bond yields rose last week as strong economic data, including GDP, pointed toward more rate hikes. Yields and stock don\u2019t typically rise in tandem but they seem to be focusing on two different things.<\/p>\n
The Fed\u2019s data-dependent approach means future rate hikes are up for interpretation. Friday\u2019s payrolls report for June will be the next data set to help shape the central bank\u2019s September decision.<\/p>\n
The stock market, for now, isn\u2019t concerned by more rate hikes. A robust earnings season so far is helping to broaden the market rally, and investors are choosing to focus on the diminishing recession chances. At the midpoint, 80% of companies have beaten earnings estimates, according to FactSet.<\/p>\n
However, with economic data galore and a third of the S&P 500 reporting this week, there\u2019s plenty in the coming days that could test the optimism.<\/p>\n
\u2014Callum Keown<\/em><\/p>\n *** Join Barron\u2019s deputy editor Ben Levisohn today at noon when he talks with Frank Cappelleri, founder of technical analysis firm CappThesis, about the outlook for financial markets, sectors, and individual stocks. Sign up here.<\/em><\/em><\/p>\n Try your hand at this morning\u2019s Barron\u2019s digital jigsaw, which is based on the week\u2019s cover story. For all games, including the daily crossword and sudoku, click here.<\/em><\/p>\n When What\u2019s Next:<\/strong> More than 51% of \u2014Janet H. Cho<\/em><\/em><\/em><\/p>\n \n Yellow,<\/span> What\u2019s Next:<\/strong> Just three years ago, Yellow, then called YRC Worldwide, got a $700 million Covid-19 rescue loan from the Trump administration. That deal left the U.S. Treasury with 30% of the stock, which it still has today, according to FactSet. Yellow shares are down nearly 72% this year.<\/p>\n \u2014Liz Moyer<\/em><\/em><\/p>\n The U.S. jobs report on Friday is expected to show that employers are still hiring at a healthy but slower rate, amid signs the economy is cooling, consumers are spending more judiciously, and the recession that economists had projected hasn\u2019t materialized.<\/p>\n What\u2019s Next:<\/strong> Kashkari said the current 3.6% unemployment rate could climb to as high as 4% in coming months, but that could still be considered a soft landing. He added that if further rate increases are needed to get to the Fed\u2019s 2% inflation target, \u201cwe will do so.\u201d<\/p>\n \u2014Janet H. Cho<\/em><\/em><\/em><\/p>\n Zelensky Says Ukraine Getting Stronger After Moscow Drone Attack<\/h2>\n Ukraine President Volodymyr Zelensky said his country was getting stronger following a drone attack on Moscow on Sunday, according to multiple reports.<\/p>\n What\u2019s Next:<\/strong> The invasion of Ukraine by Russia has had a major impact on energy security around the world and these comments point to continued uncertainty. One bright spot is Saudi Arabia will hold talks next month aimed at getting Western allies and developing countries aligned on the shape of what\u2019s needed for peace in Ukraine, according to The Journal. Russia is not included. <\/p>\n \u2014Rupert Steiner<\/em><\/em><\/p>\n Just as the U.S. housing market appeared more promising for prospective buyers, market conditions are melting down again, with mortgage rates and home prices rising, while the inventory of available homes is still declining.<\/p>\n What\u2019s Next:<\/strong> Insured damage in the U.S. from severe storms, wildfires, floods and other natural disasters has topped $90 billion in each of the past three years, much higher than inflation-adjusted averages for the previous four decades. insurance broker Aon said.<\/p>\n \u2014Janet H. Cho<\/em><\/em><\/p>\n***<\/h4>\n
Apple, Amazon.com Reports to Show Latest Consumer Spending Trends<\/h2>\n
\n Apple
\n and
\n Amazon.com
\n report quarterly results on Thursday, investors hope to hear more about the fallout from a slowdown in consumer spending, waning demand for electronics ahead of the release of Apple\u2019s iPhone 15 and virtual-reality headsets, and details about Amazon\u2019s Prime Day sales.<\/p>\n\n
\n S&P 500
\n companies have reported their quarterly financial results, and earnings are on pace to fall by 7.3% compared with last year. That would be the largest drop since second-quarter 2020, according to FactSet.<\/p>\n***<\/h4>\n
Freight Hauler Yellow to Seek Bankruptcy, Shut Down<\/h2>\n
\n a nearly 100-year-old trucking business that moves freight around the country for big retailers such as
\n Walmart
\n and
\n Home Depot
\n and other companies, is shutting down. A string of mergers left it burdened with debt. It has also been in a dispute with the International Brotherhood of Teamsters.<\/p>\n\n
\n United Parcel Service
\n struck a tentative five-year contract<\/strong> with the company, averting a potentially devastating strike that could have disrupted global shipping.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n
July Jobs Report Hits Friday as Fed Navigates Soft Landing<\/h2>\n
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Housing Market Conditions Are Worsening for Aspiring Buyers<\/h2>\n
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