Stocks will likely not do much in today's session ahead of
jobs data on Friday. Volumes will likely start thinning in
today's session given the July 4th holiday on Thursday and
Wednesday's half-day session.
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On the data front, we have the May Factory Orders and June
vehicle sales numbers coming out today, with both readings
expected to show improvements from the preceding months' levels.
Wednesday's truncated session will see the service-sector ISM
survey and the ADP jobs report. Monday's manufacturing ISM survey
provided some relief, with growth in new orders, production and
inventories pushing the index back into expansion territory.
Tomorrow's ADP report will give us a preview of Friday's jobs
reading, though the decline in the manufacturing ISM index's
employment sub-component is somewhat worrying.
We will know more about the state of the economy after Friday's
jobs report, but the reality is that the economic outlook has
been steadily stabilizing, belying earlier fears that this year's
fiscal tightening could derail the recovery. My sense is that
this backdrop is sufficient to push the Fed towards tapering its
bond purchases in the fall, though I do acknowledge that Fed
officials have been going out of their way lately to sound
otherwise. And that is the key disconnect between the market and
the economy. The market's gains over the last few days are way
too much centered on what the Fed will or will not do - and that
remains its most vulnerable spot.