As summer unofficially ends, stocks are near record highs.
On Friday, the major indexes closed little-changed with the Dow the only major index closing in the red, dropping 22 points, or 0.1%. The S&P 500 gained 0.39 points, or 0.01%, to close just above 2,901, below a record high but confirming the monthly close above the 2,900 level.
The Nasdaq closed up 21 points, or 0.3%, to close above 8,100 on a monthly basis just about 20 points below a record high.
In the week ahead, trade is likely to remain a major storyline as U.S.-Canada trade talks ended the week with no resolution, leaving the future of a new North American trade agreement in question after the U.S. and Mexico agreed to new terms on Monday.
The U.S.-China trade spat should also be in the headlines with reports last week indicating that Trump will move to impose tariffs on $200 billion of Chinese imports when a public comment period ends this coming week.
In the week ahead, investors will also be greeted by a full slate of economic data to kick off September though Monday’s Labor Day holiday will make it just a four-day trading week for U.S. investors.
The highlight this coming week will be the August jobs report due out Friday morning, which is expected to show the U.S. economy created 190,000 new jobs with the unemployment falling to 3.8%, which would match a post-crisis low.
And on the earnings side Broadcom (AVGO) earnings after the market close on Thursday will be the only results from a member of the S&P 500.
And on Wednesday, tech executives are expected to appear on Capitol Hill with Twitter (TWTR) CEO Jack Dorsey and Facebook (FB) COO Sheryl Sandberg set to testify before the Senate Intelligence Committee. Google hasn’t yet committed to sending CEO Larry Page and the Senate have rejected the company’s offer to send a lower-level executive, according to The Washington Post.
With Trump last week taking multiple shots at Google and accusing the search engine of biasing results against conservative news services, one expects a frosty reception for the industry in Washington, D.C.
Twitter CEO Jack Dorsey will be among the tech executives to appear before lawmakers on Capitol Hill this coming Wednesday. (AP Photo/Richard Drew)
Monday: U.S. markets closed for Labor Day.
Tuesday: Markit U.S. manufacturing PMI, August (54.5 expected; 54.5 previously); Institute for Supply Management PMI, August (57.6 expected; 58.1 previously); Construction spending, July (+0.5% expected; -1.1% previously); Auto sales, August (16.7 million vehicle annual pace expected; 16.68 million previously)
Wednesday: Trade balance, July (-$49.7 billion expected; -$46.3 billion previously)
Thursday: ADP private payrolls, August (+190,000 expected; +219,000 previously); Initial jobless claims (213,000 expected; 213,000 previously); Nonfarm productivity, Q2 (+2.9% expected; +2.9% previously); Markit U.S. service PMI, August (55.2 previously); Institute for Supply Management non-manufacturing PMI, August (56.8 expected; 55.7 previously)
Friday: Nonfarm payrolls, August (+190,000 expected; +157,000 previously); Unemployment rate, August (3.8% expected; 3.9% previously); Average hourly earnings, month-on-month, August (+0.2% expected; +0.3% previously); Average hourly earnings, year-on-year, August (+2.7% expected; +2.7% previously)
A summer boom for the U.S. economy
When President Donald Trump thinks back on the summer of 2018, he will likely want to forget the legal trouble some of his closest confidants found themselves in.
Instead, Trump can remember the summer months of 2018 as a time when the economic boom he promised during his campaign came to pass.
In May and June, the U.S. economy added more than 240,000 jobs. In July, 157,000 jobs were created though the closure of Toys ‘R Us stores appeared to impact that total by about 32,000. The unemployment rate in July stood at 3.9%.
This summer it was and remains a great time to get a job in the U.S. As Federal Reserve Chair Jay Powell said at a conference in late August, “The economy is strong. Inflation is near our 2 percent objective, and most people who want a job are finding one.”
The economy is also growing at a pace not seen in four years.
Last week, the second estimate of second quarter GDP showed the economy grew at an annualized rate of 4.2% during the second three-month block of 2018. Not since the third quarter of 2014 has the economy grown at a similar rate.
The stock market also hit record highs in the final week of August.
And although some analysts and economists have argued that recent GDP numbers are inflated as consumers pull-forward spending ahead of anticipated price increases from tariffs, Neil Dutta at Renaissance Macro explained on Yahoo Finance’s daily live show The Final Round on Wednesday that this story is not really backed up by the data.
“Most of the upside in the consumer spending numbers was in restaurants, clothing, things not really effected by tariffs,” Dutta said. “A consumer is not going [to say], ‘Hey, let me go to the Cheesecake Factory to beat all these tariffs that are coming.’”
Dutta added that with consumer confidence elevated amid a strong labor market, the consumer — and by extension the broader U.S. economic outlook — remains solid. “The bears are stretching,” Dutta said, referencing economists or analysts looking for signs of a weakening economy. “It’s sort of embarrassing.”
In a note to clients published Friday, Greg Valliere, chief global strategist at Horizon Investments, outlined the five big stories of the summer at the intersection of markets and politics.
Number one was the economic boom.
“The Atlanta Fed is predicting third quarter GDP growth of 4.1%, which feels about right,” Valliere said.
“Corporate profits are booming. Inflation is still contained. The jobs market is red hot, with labor shortages in much of the Sun Belt. There’s so much fiscal and monetary stimulus in the pipeline that it could be late winter before the economic momentum cools to a more sustainable pace.”
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland