Weekly Market Update July 13, 2026

The June employment report was rather uninspiring. The nation added an estimated 57,000 jobs last month, which was half the consensus forecast for 115,000 additions. The prior two-month total was revised down by 74,000 jobs. The unemployment rate did tick down, from 4.3% to 4.2%, but the change was primarily driven by more individuals leaving the labor force. The U.S. labor force participation rate, which measures the percentage of the civilian noninstitutional population (ages 16 and older) that is either employed or actively seeking employment, fell to 61.5%, its lowest rate in 50 years, excluding the COVID-19 pandemic era. On the positive side, initial weekly unemployment insurance claims are still low and the number of job openings totaled 7.3 million last month, neither of which is indicative of building stress in the labor market. 

Inflation remains a bigger concern for the Federal Reserve. The pace of both consumer and producer (wholesale) price growth surged this past spring, exacerbated by higher oil prices due to the Iran war and the closure of a key oil shipping waterway. As we write this, both sides are dropping bombs. It is also worth noting that average hourly earnings for all employees on private nonfarm payrolls rose by 0.3%, to $37.64, in June. On a 12-month basis, average hourly earnings increased by 3.5% up from 3.4% in May. The increase in average salaries will not make the Federal Reserve’s task of reining in inflation, which is running well above its comfort level of 2.0%, any easier. 

The central bank is expected to hold the benchmark short-term interest rate steady at this month’s Federal Open Market Committee (FOMC) meeting, which concludes on July 29th. For now, the rate of 3.50% to 3.75% is seen as sufficiently restrictive of excessive growth. It also gives the Fed more time to assess the fluid situation in the Middle East and its impact on the oil market, which will play a big role in the direction of inflation in the months ahead. We think the Fed, under Chairman Warsh’s leadership, would like to avoid having to intentionally slow the economy to rein in inflation. 

Conclusion: Investors should continue to diversify their portfolios, but we advise staying with large-cap stocks in companies that generate strong cash flow and are sector leaders.

Source: Valueline.com