Gold prices, Covid-19 cases offer clues to market's next moves after record jobs report

This week, stock market traders will monitor the rising number of cases of Covid-19, how many people are filing for unemployment, and gold prices.


The U.S. stock market heads into the long Fourth of July weekend with a bang: The S&P 500 rose for four straight days, with the benchmark up 4.6% as of mid-Thursday for the holiday-shortened week.

After struggling in recent weeks, the rally in stock prices has resumed once again, fueled by some better-than-expected economic data. On Thursday, the monthly labor report for June showed that employers added a record 4.8 million jobs last month, while the unemployment rate fell to 11.1% from 13.3% in May.

While optimism has returned to Wall Street, there's more uncertainty elsewhere. The U.S. keeps notching new records for the number of new daily Covid-19 cases, and that's prompted governors in states like Washington, California, Florida, Texas, Michigan, and New York to pause or roll back reopening efforts. If more states do so and the number of cases continues to rise, that could put a damper on enthusiasm for a swift recovery for both the economy and the stock market.

As a result, the coronavirus pandemic will take precedence once again in the week ahead as traders try to assess the impact on reopening efforts. In addition, gold prices just hit the highest level since 2012, which reflects concern among traders about the pace of economic growth.

Here's what to watch in and around the stock market during the week ahead — and how the news could affect your bottom line.

Tracking Covid cases and unemployment

What's happening: The pandemic will once again take precedence on Wall Street in the week ahead, especially after the number of daily cases of Covid-19 surpassed 50,000 for the first time. As several states pause or roll back plans to reopen their economies, that could mean some newly employed Americans will be furloughed or laid-off again.

Why it matters: The best real-time indicator of the economic recovery is a weekly report detailing how many Americans are filing new applications for unemployment. That number just rose more than economists expected, up 1.427 million for the week that ended June 27. A resurgence of Covid-19 cases could result in an uptick in the number of people who are receiving jobless claims, so traders will closely monitor the report due on Thursday, July 9.

What it means for you: If you are laid-off again, you will need to file for benefits again, but you can likely resume receiving this money and essentially pick up where you left off. It's possible there could be additional assistance on the way from the government in the form of a second stimulus check or other measures such as a $4,000 tax credit for taking a vacation within the United States.

If you're on the job hunt, catch the eye of recruiters by optimizing your LinkedIn profile or qualify for new positions by improving your technical skills. up your skills. Finally, find ways to earn extra cash this summer while you look for a new job and learn tips from supersavers.

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Gold prices reflect lingering fears about economic recovery

What's happening: While gold prices have been rising pretty steadily for years, there's been a sharp increase more recently. In the past week, the price of gold jumped to an eight-year high of more than $1,800 per ounce, up from less than $1,675 just a few weeks earlier.

The latest surge in gold prices reflects mounting fears of a resurgence of new coronavirus cases. And some experts believe the price could be headed for $1,900 per ounce soon.

Why it matters: Investment pros consider gold to be a safe haven, an asset that investors typically favor during periods of slower economic growth or as a refuge for when other markets decline. Because "there's only so much gold out there," demand for this commodity during the pandemic has helped to push prices higher. 

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People invest in gold because it can serve as a "hedge" for their portfolios. When other investments lose value, gold tends to appreciate. During the past year, the price of gold has jumped more than 23% in the past year, while the S&P 500 is up about 5.5% in that same time period.

What it means to you: Even if you don't have any investments in gold — the metal itself or exchange-traded funds (ETFs) that track this commodity — it's still useful to track its performance. That's especially true when gold prices are going up at the same time as the stock market, because it reflects differing views about what traders expect for the pace of economic growth ahead. In addition, rising gold prices can mean it's a better time to sell old jewelry or coins.

Finally, the rise in gold prices can be a good reminder of why it's important to have a mix of various assets in your portfolio. Diversification can help to reduce your overall risk, because your portfolio's performance doesn't hinge on just one investment.

The bottom line

The U.S. stock market is coming off its best quarter since 1987, though experts on Wall Street will continue to monitor the pace of reopenings and the prospect for a second stimulus check in the market outlook for July

Thanks to the gains in the past week, the U.S. stock market is about 7% below its pre-pandemic peak. For the year, the S&P 500 now is down less than 3%. However, experts caution that bumpiness could once again return, especially when earnings season kicks off in a couple weeks. 

The market's historic ups and downs this year are a good reminder why it's important to invest for the long term, especially for new investors who have been attracted by a "generational opportunity" to buy stocks at lower prices. 

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Whether you're a seasoned investor or have just started your journey, remember to keep a long-term perspective with your portfolio and avoid making emotional decisions. When in doubt, take a cue from the best investors who have ridden out past periods of turbulence. 

Finally, it's important to remember that downturns can benefit long-term investors and selling during a decline could be the biggest mistake of your investing career. In fact, right now could be a "real opportunity to create wealth."

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