It’s the economy, stupid: Investors will have to wait until Friday for the main event of the week: the all-important July jobs report.
The key thing to watch is whether robust jobs growth is continuing into the second half of the year. In June, the government said 288,000 jobs were added, bringing the total number of jobs added in the first six months of 2014 to 1.4 million. That was the strongest six months for job growth since 2006.
Meanwhile, the unemployment rates stands at 6.1%, which isn’t far off from what many economists consider full employment.
But before the jobs report, Wall Street will get a first read on second quarter gross domestic product (GDP) Wednesday morning. GDP is the most comprehensive gauge of how the economy is doing, and a majority of GDP comes from consumer spending.
Analysts mostly believe that the first quarter’s 2.9% contraction was a blip due primarily to unusually harsh weather, but this week’s GDP report should provide more clarity on how the economy is faring.
Then there’s the Federal Reserve. The central bank will release a statement outlining its latest monetary policies on Wednesday afternoon.
It’s widely believed that the Fed will announce another $10 billion pullback in monthly bond purchases, but investors will be scrutinizing every word of the statement for clues as to when the Fed plans to raise interest rates.