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The major market indexes were up for the week, helped by a strong jobs report. The S&P 500 gained 2 percent, and the Dow Jones Industrial Average was up almost 1 percent. The Nasdaq gained 4.6 percent for the week and has closed five straight days in the green for the first time this year.

For the year, the markets are still down. The Dow is down 13.8 percent, the S&P 500 is lower by 18.2 percent, and the Nasdaq is down 25.6 percent

The jobs report for June was released on Friday, showing an increase of 372,000 jobs. The better-than-expected report calmed fears that a recession had either already begun or was about to begin. The unemployment rate stands at 3.6 percent, which is a figure that is not consistent with an economic downturn.

There has been a great deal of talk that we are already in a recession, which will be proven right or wrong when the second-quarter GDP is released later this month. But four months in a row of nearly 400,000 job growth is making some feel we will avoid two consecutive negative GDP reports.

The economy will be put to the test in the coming months with continuing high inflation and an almost certainty that the Federal Reserve will raise rates several more times this year.

The first quarter GDP shrank by 1.6 percent, and the latest from the Atlanta Federal Reserve’s GDPNow tracker believes that the second quarter will show another contraction of 1.2 percent. Most economists define a recession as two consecutive negative GDP reports.

Initial unemployment benefits filings reported on Thursday showed an increase of 4,000 from the previous period at 235,000. The total is the highest since January 15. The four-week moving average increased to 232,500, its highest level since December 2021.

More concerning is the planned layoffs figure. According to the job placement firm Challenger, Gray & Christmas, planned layoffs jumped to 32,517 in June and the highest total since February 2021.

The auto sector reported a 155 percent increase in layoffs compared with the same period last year. The real estate sector also reported a high number of layoffs. The job placement firm said ten industries have already announced more layoffs this year than in 2021 out of the 30 industries they follow.

Also noted in the job report was that the average hourly earnings increased just 0.3 percent, which could be another sign that inflation is slowing. For the year, average hourly earnings are up 5.1 percent on a 12-month basis.

The yield curve inverted last Tuesday for the second time this year when the 2-year U.S. Treasury yield rose above the 10-year Treasury yield. An inverted yield curve is an indicator of a possible recession. The last time the yield curve inverted was last April. As of the close on Friday, the yield curve remains inverted.

Oil prices fell below $100 per barrel last week for the first time since early May. If a recession occurs, the belief is that there will be a drop in demand for oil. But the drop below $100 didn’t last long as West Texas Intermediate closed Friday at $104.80.

Recession worries also caused the 30-year fixed mortgage rates to drop again last week. Over the past two weeks, mortgage rates have dropped by half a percent. The 0.5-point drop only provides minor relief to potential homebuyers as home prices remain high.

Housing should continue to normalize if price growth slows due to a lack of buyers, an economic slowdown and an increasing housing supply. According to Freddie Mac, the average 30-year fixed mortgage stands at 5.3 percent.

Next week, second-quarter earnings begin, and the June consumer price index will be released. The consumer price index will give the Federal Reserve an idea if their rate hikes are starting to slow inflation. The CPI report could influence their decision later this month at the next FOMC meeting.

The markets finished the week in the negative territory again. It was the 11th losing week out of the past 13 weeks for the S&P 500.

Inflation remains the main concern, with the possibility of a recession the second. For the week, the Dow Jones Industrial Average was down 1.3 percent, the S&P 500 lost 2.2 percent, and the Nasdaq lost another 4.1 percent.

As we come to the second half of the year, the S&P 500 is down 21 percent, making it the worst first half for the S&P 500 since 1970. Last month, the index was down 8.4 percent, making it the worst month of June since 2008.

Whether we go into an actual recession or just an economic slowdown is a guess, and some economists believe we are already in a recession. At the end of July, we will get the first estimate of the second-quarter GDP report, which should verify if we are indeed in a recession or not. Some of the financial markets that are indicating we are in an economic slowdown include:

• Stocks: The S&P 500 is in a bear market and defensive stocks are outperforming other sectors.
• Bonds: The yield curve is flattening, the difference between the 10-year and two-year yield, and the yields move lower.
• Commodity prices are rolling over and copper is dropping.
• Currency: The dollar remains strong and continues to outperform as a safe haven.

Copper prices were down 20 percent in the second quarter, the largest quarterly drop since 2011. The price of copper is normally used as an indicator of economic trends, and copper dropping in price indicates concern.

The first half of 2022 has seen all sectors of the S&P 500 fall except for the energy sector. The defensive sectors that include utilities, consumer staples and healthcare have done better than others, but have still recorded losses. Here is a recap of all S&P 500 sectors for the first half of the year:

• Energy: + 29 percent
• Utilities: – 2 percent
• Consumer Staples: – 7 percent
• Health Care: – 9 percent
• Industrials: – 17 percent
• Materials: – 19 percent
• Financials: – 19 percent
• S&P 500: – 21 percent
• Real Estate: – 21 percent
• Information Technology: – 27 percent
• Communication Services: – 30 percent
• Consumer Discretionary: – 33 percent

Overall, the stock market had its worst first half in over 50 years, with only oil showing a gain. Here is the final tally of the major market indexes as of the close on June 30th:

• West Texas Intermediate: + 39 percent
• Dollar: + 9.3 percent
• Nikkei: – 9.8 percent
• Bonds: – 10.1 percent
• Dow Jones Industrial Average: -15.9 percent
• Stoxx Europe 600: – 16.9 percent
• S&P 500: – 21.1 percent
• Nasdaq: – 30.3 percent
• Bitcoin: – 59.6 percent

Pending home sales for May were up slightly, but still 13.6 percent lower than May 2021. The uptick in May sales broke a streak of six months of declining demand. The slight increase is most likely due to a modest lowering of mortgage rates in May and more homes came on the market.

According to the S&P CoreLogic Case-Shiller Index, home prices rose 20.4 percent in April compared to April 2021. But the price increases were showing signs of slowing.

The 30-year fixed mortgage rate dropped slightly last week to 5.7 percent. The dropping mortgage rates is a sign that inflation and recession worries are affecting the housing market. A year ago, the average 30-year mortgage stood at 2.98 percent.

The Conference Board reported that U.S consumer confidence dropped to its lowest level in 16 months as inflation worries, especially about food and gas, continue to concern consumers.

The Institute for Supply Management released its monthly report for June last Friday. The current Purchasing Managers Index (PMI) is at 53.0, a drop of 3.1 from the previous month and below the forecasted 54.9.

A reading above 50 indicates growth or expansion in the U.S. manufacturing sector. In addition to inflation and recession worries, supply chain issues are among the leading causes of the drop in June.