Mixed Jobs Data; Fed Governors Want More Interest Rate Hikes; US, China Spat Rattles Semiconductor Sector: The Week In The Markets

The June jobs report released Friday showcased mixed data on the economy. The unemployment rate dropped from 3.7% to 3.6%, but job additions came in at 209,000, below economist expectations of 225,000. The figure is a sharp decline from May's 306,000 increase. 

Wages increased by an average of 12 cents, or 0.4%, in June.

Traders are mostly expecting an interest rate hike from the Fed in late July, but this week's weaker job market numbers decrease the likelihood of a consecutive hike in September. 

Traders adjusted their expectations for a second Fed hike in September from 27% to 22% after the jobs data was released, according to the CME Group FedWatch tool. 

Minutes from the June Federal Open Market Committee meeting were released on Wednesday, revealing a strong consensus among committee members for additional interest rate hikes in 2023. Some members even pushed to continue hikes in June, when the FOMC decided to pause for the first time in over a year of consecutive interest rate increases. 

A new series of chess moves were carried out by the U.S. and China this week in the ongoing battle to dominate the semiconductor supply chain in the race for artificial intelligence supremacy. China issued new restrictions on the export of key metals used in chip manufacturing, while the Biden administration announced a new plan to ban U.S.-based cloud services from companies like Amazon AMZN and Microsoft MSFT to Chinese companies.

The FDA granted approval to lecanemab, a drug sold by the brand name Leqembi, produced by Eisai Co and Biogen Inc. BIIB. It’s the first FDA-approved medication to show improvement in slow memory and thinking problems related to Alzheimer's disease. 

The drug is associated with side effects like brain swelling and tiny bleeds in some patients. Medicare coverage is expected for the drug following the FDA approval. 

Delivery giant United Parcel Service UPS is facing labor trouble as its contract with the Teamsters Union, which represents nearly 340,000 UPS workers, ends this month without a new agreement. A failure to achieve successful negotiations could lead to the largest labor strike in U.S. history since the 1950s.

Tesla TSLA delivered over 466,140 cars in the second quarter of this year, which was up 83% year-over-year and represents the second-best quarterly deliveries in the company's history. More than half of those vehicles were made in Tesla's Giga Shanghai factory in China, where the company has its second largest market after the U.S. Both data points reveal that stable U.S.-China relations are critical for the automaker. 

What To Watch: On Monday, remarks by Fed Vice Chair Michael Barr, San Francisco Fed President Mary Daly and Cleveland Fed President Loretta J. Mester will provide more insight into the Fed's interest rate path. 

Consumer inflation data for June will be revealed on Wednesday, when Richmond Fed President Tom Barkin and Atlanta Fed President Raphael Bostic will also give speeches. The release of 2023's fifth edition of the Fed's Beige Book will also shed more light Wednesday on upcoming monetary policy measures. 

On Tuesday, Mexican telecoms giant América Móvil AMX will release earnings. Supply chain solutions company Fastenal FAST and Delta Airlines DAL will release their reports on Thursday.

Friday launches the earnings season for financial heavyweights, with reports from JPMorgan Chase JPM, Wells Fargo WFC, India's HDFC Bank HDB, BlackRock BLK and Citigroup C. Health care giant UnitedHealth Group UNH and insurer The Progressive Corporation PGR will also host earnings calls Friday.

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