CNBC Daily Open: July was great for stocks — and oil

Oil pump jack on Great Plains, southeastern Wyoming.

Marli Miller | Universal Images Group | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Tepid markets
U.S. markets
traded higher Monday as all three major indexes edged up slightly after a winning week. Europe’s regional Stoxx 600 index eked out a 0.12% increase on the back of a dip in inflation and higher-than-expected economic growth in the euro zone.

Upbeat euro zone figures
The euro zone reported positive economic data Monday. Inflation in July was 5.3%, 20 basis points lower than June’s reading. Separate data showed that the continent’s gross domestic product grew 0.3% in the second quarter, higher than the 0.2% forecast. That figure was mostly boosted by Ireland’s economy, which expanded 3.3% during the period.

Tighter lending conditions
For the second half of 2023, U.S. banks expect to tighten standards for all loan categories, according to the Federal Reserve’s Senior Loan Officer Opinion Survey. That means credit limits might lower, and auto loans might be harder to get. In the commercial and industrial lending segment, banks are already seeing less demand for loans.

New filing against JPMorgan Chase
JPMorgan Chase handled more than $1.1 million in payments from Jeffrey Epstein to “girls or women” even after the bank says it removed the sex offender as a client in 2013, a lawyer for the U.S. Virgin Islands told a judge Monday. The Virgin Islands alleges that JPMorgan facilitated and financially benefited from Epstein’s sex trafficking of young women.

[PRO] Where’s the S&P 500 going?
The S&P 500 has rallied a remarkable 20% in seven months and is only around 200 points away from its all-time high. CNBC Pro’s Bob Pisani explains what drove the S&P to such heights, and where the index is going for the final five months of the year.

The bottom line

A soft landing — where inflation cools while the U.S. economy, labor market and corporate earnings continue growing — is, of course, good news for markets.

Traders think that scenario is looking increasingly likely. Stocks inched up Monday. The S&P 500 added 0.15%, the Dow Jones Industrial Average rose 0.28% and the Nasdaq Composite advanced 0.21%.

That gave all indexes a rosy July. For the month, the S&P climbed 3.1%, its fifth consecutive month of gains. The Dow jumped 3.4% after experiencing a 13-day rally, its longest since 1987. The Nasdaq Composite popped 4.1%, its first five-month streak in more than two years.

The optimism extended to the commodities market. The promise of higher economic activity, after all, raises demand for the raw input needed to keep the world moving, literally.

Oil prices are poised to have their best month since January 2022, when both Brent crude and West Texas Intermediate crude added more than 17.2%. At publication time, Brent’s up 14.23% and WTI’s 15.8% for the month. (It’s still the last day of July in the U.S. because of time zone differences.)

Metal prices are climbing as well. Prices for aluminum and zinc rose 2.7%. Copper — typically seen as an indicator of economic activity because it’s used in most parts of the economy — is at its highest since May 1, putting it on track to have its best month since January.

Rocketing stock prices might not necessarily, or directly, have effects on the cost of eggs in grocery stores, for example. But a hot commodities market nudges up prices in the real world.

That’s the difficult balancing act the Federal Reserve has to contend with: As a soft-landing scenario becomes more plausible, renewed economic activity might, ironically, make inflation harder to suppress.

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