Friday, July 1st -- the first day of the month, the third quarter and the second half of the year -- ended on a positive note heading into a long holiday weekend. The stock market is closed on Monday for July 4th. Perhaps, it’s a welcome breather after Wall Street on Thursday wrapped up a terrible first half of 2022.

The S&P 500 posted its worst six-month start to a year since 1970. From January to the end of June, the broad market index lost nearly 21% and fell into bear market territory, defined as a drop of more than 20% from a prior high (made in in early January). The three main drivers of that dismal performance were the supply chain woes exacerbated by China’s Covid lockdowns, Russia’s invasion of Ukraine and the highest inflation in 40 years that has forced the Federal Reserve to aggressively raise rates to slow the economy down.

For the week, all of the major stock benchmarks were lower— the fourth weekly decline in the last five. On Friday, shares of major chipmakers — Qualcomm (QCOM), Nvidia (NVDA), Marvell (MRVL), Nvidia (NVDA) and Advanced Micro Devices (AMD) — fell after Micron Technology (MU) provided weak guidance in its quarterly earnings release on Thursday after the bell. Micron was down more than 5% during Friday’s trading, before trimming some of those losses by the close.

Meanwhile, the U.S. dollar index remains near the 105 level. Gold continues to hover around $1,800 per ounce. Commodities have been volatile, including American oil benchmark West Texas Intermediate crude, which ended the month of June lower for the first time since November. While it closed higher Friday, WTI and many major commodities have been rolling over recently as we pointed out in our deep-dive for Club members last week. The yield on the 10-year Treasury meaningfully pulled back to under 3% and near its lowest levels since May.

Looking back

It was a busy week for economic data. Monday brought the durable goods report, which indicated a 0.7% monthly increase in May — ahead of the 0.2% monthly advance expected. We also got the pending home sales report for the month of May, which pointed to a 0.7% monthly gain, a nice surprise versus expectations for a 3.9% monthly decline. However, sales were still down 13.6% annually.

On Wednesday, the final reading for first quarter gross domestic product pointed to a 1.6% annualized contraction, greater than 1.5% contraction expected.

On Thursday, initial jobless claims for the week ended June 25 came in at 231,000, missing expectations of 229,000. May personal spending results were also released on Thursday and indicated a 4.7% annual increase in the core PCE price index, the Fed’s preferred measure of inflation, slightly lower than the 4.8% expected and a welcome deceleration versus the 4.9% rate seen in April.

On Friday, the Institute for Supply Management said manufacturing activity in June was weaker than expected, with its index of national factory activity dropping 53 for the month, the lowest reading since June 2020.

What’s ahead

No portfolio companies will report in the week ahead. The storm of earnings season unofficially kicks off with JPMorgan Chase (JPM) on July 14. 

However, the coming week promises to be a big week on the macro front. On Wednesday, July 6th, we will get the FOMC minutes from the Federal Reserve's last FOMC meeting, which gives investors a gauge into the discussions that went on during the last meeting. It usually doesn't contain anything new and surprising to the market, but given we're in a news-vacuum environment, it certainly can be a market-moving event and some market volatility is to be expected. On Friday, July 8th, we get the nonfarm payroll report, which is an important gauge for the economy and indicator for the Fed's ever-challenging target of a low unemployment rate amid rising interest rates.