June's job report could be even stronger than May's, but consumer confidence still looks shaky


The U.S. stock market continues to whipsaw, inching closer to its February highs only to slump once again. The S&P 500 fell 2.9% through Friday and is on pace for its first monthly decline since March.

The stock market's rally has struggled to gain steam in recent weeks amid uncertainty on Wall Street about the health of both the economy and American citizens. The U.S. just set a new record for the highest daily number of coronavirus cases, surpassing previous records from April, according to an NBC News tally.

Ahead of the Fourth of July holiday observed on Friday, traders will get the all-important monthly employment report, and economists forecast a big spike in hiring in June. Meanwhile, Wall Street will keep an eye on whether Americans feel more or less optimistic about the economy and their personal finances. That sentiment will be reflected in a survey of consumer confidence scheduled for release this week.

The past week brought some additional economic data that pointed to signs of a recovery, including big jumps in the number of homes sold in May and for orders of big-ticket factory goods. While the number of Americans filing for long-term unemployment claims fell below 20 million for the first time in two months, the extended benefits from the federal government are due to expire in about five weeks. That could lead to more pain for individuals and the economy.

What happens after enhanced unemployment benefits run out?

Video by Stephen Parkhurst

Finally, minutes from the Federal Reserve's June meeting will be released on Wednesday, which could indicate what further action policymakers are debating.

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

Economists forecast another record surge in hiring

What's happening: The jobs report for May shattered records for hiring, as employers unexpectedly added 2.5 million nonfarm workers to payrolls that month. Economists are expecting an even bigger increase in hiring for June, of 3 million. In addition, these experts forecast that the unemployment rate fell to 12.2% from 13.3% in May. If so, that's still about three times the pre-pandemic level and higher than the peak of the Great Recession.

The Department of Labor's monthly employment report is scheduled for release on July 2, a Thursday, given that markets are closed Friday July 3 for Independence Day (observed).

Why it matters: The latest report detailing weekly unemployment claims pointed to continued gradual improvement in the labor market. Still, while broader reopening plans nationwide are underway, there have been regional closures that could affect those numbers. For example, Apple announced that it will reclose 32 stores in six states because of rising numbers of Covid-19 cases.

5 companies hiring thousands of new jobs during the pandemic

Video by Jason Armesto

What it means for you: If you're out of work, there are signs that there may still be additional assistance on the way in the form of a second stimulus check. If you haven't already, file for unemployment benefits, consider brushing up on job skills, catch the eye of recruiters by optimizing your LinkedIn profile, and find some ways to earn extra cash around the Fourth of July.

Finally, traders have been betting for weeks that the economy will rebound quickly, even with a recession already underway. While some of that optimism has faded more recently, a better-than-expected jobs report could help to push stock prices higher once again.

Is consumer confidence still subdued?

What's happening: The economic recovery depends largely on the behavior and choices of American consumers. That's why traders will closely monitor a report due in the week ahead that measures consumer confidence. 

A monthly survey from the Conference Board is scheduled for release on Tuesday. Economists currently project that this measure rose slightly in June compared with May but is still well below pre-pandemic levels. Similarly, a separate survey released on June 26 showed that consumer confidence rose in June, though is well below levels from one year ago, according to the University of Michigan

Why it matters: Traders and economists watch surveys like these closely because how confident consumers feel translates to how comfortable they may feel spending on big-ticket items — and that ultimately affects the pace of gross domestic product (GDP) growth. Consumer spending accounts for more than two-thirds of GDP.

What is GDP and why is it important?

Video by David Fang

What it means for you: With millions of Americans out of work, it's not surprising that consumer confidence fell sharply in March and April before rebounding slightly in May. However, if consumers aren't feeling much more confident about their personal financial situation and the economy now than in the earlier months of the pandemic, Wall Street could view that as a cautionary sign. Surveys like these are small pieces of a bigger puzzle that traders use to get a sense of the pace of growth ahead. 

As for your personal financial situation, there are steps you can take to feel more confident, too. Learn techniques from the best investors to stay calm when the market gets bumpy and money tips from supersavers

The bottom line

It's been about three months since the U.S. stock market hit bottom during the pandemic-fueled sell-off. As a result of the past week's decline, the S&P 500 now is 11% below its pre-pandemic peak, and for the year, this benchmark is down just 6.9%.

Traders will continue to monitor the rate of coronavirus infections, particularly as those tick up in various parts of the country. They'll also watch the reopening efforts and try to gauge which parts of the economy are rebounding the fastest.

How to plan for stock market downturns

Video by Stephen Parkhurst

After the stock market surged more than 40% between late March and early June, it became, more recently, a bit turbulent. 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.

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. 

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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