The Independence Day holiday will make this week a short one for investors following the Dow Jones Industrials (DJINDICES:^DJI), but that doesn't mean there'll be any less economic data for them to keep an eye on. In particular, one key economic report will play the biggest role in the direction of the Dow and the broader stock market this week, as investors will get the latest look on how employment fared in June. Yet investors in Ford (NYSE:F), General Motors (NYSE:GM), and other auto companies will want to watch closely at how auto sales fared last month, as they provide a key barometer to an important part of the U.S. economy. Let's take a closer look at what investors are expecting to see from these economic reports.
How will the automakers fare?
On Tuesday, the major automakers will release their sales figures for the month of June. Investors expect sales to drop slightly from May's annual rate of 16.8 million, with consensus figures looking for roughly 16.4 million total sales on an annualized basis. The head of sales at Chrysler Group predicted that Chrysler's June sales figures would be up from year-ago levels, but he had less encouraging views on the rest of the industry, projecting overall U.S. sales to come in flat to down 2%. For Ford, one concern will be whether sales of its F-Series pickup trucks continue to slide even as General Motors and Dodge models see stronger sales. As Ford anticipates the debut of its newly designed 2015 F-150, keeping sales of its older-model trucks will force the company to decide between volume and margins in order to get the best business result.
In a compressed week, the June monthly employment report will come on Thursday rather than Friday, at the same time as weekly jobless claims data gets released. Economists expect the unemployment rate to hold steady at 6.3% while nonfarm payrolls rise by about 211,000, a small drop from the 217,000 jobs that the Bureau of Labor Statistics reported for May and consistent with the range we've seen over the past several years.
Last month's job gains were notable as many reported how they finally brought the U.S. economy back to its pre-recession levels, having regained all the jobs reported lost between early 2008 and early 2010. But looking beyond the headline numbers, many investors will want to see evidence that efforts to fight long-term unemployment and chronic underemployment are making progress as well. All in all, at the current pace of gains, it could take years for the economy even to approach full capacity in the labor market, and employers will still have to struggle with finding potential workers with the skills they need.
Be ready for volatility
With the Dow Jones Industrials only trading for half a day on Thursday and being closed on Friday, traders will have to cram a lot of response to economic data into a short timeframe. Long-term investors should be ready for volatility and use it to take advantage of opportunities that could arise as a result.