By now you may have received your quarterly statement and noticed our new quarterly reports. We hope you find our new reports more informative and easier to read. Due to the new format, some clients have asked whether there has been a change to our billing procedures. We wanted to let you know that there are no changes to our procedures, and we will include a short sentence in future quarterly reports for more clarity.
The stock market maintained its resiliency over the past week, as corporate earnings continued to roll out with generally better than expected results. Though large cap growth companies have reasserted their dominance over the past week, they no longer appear to be singing a solo, as they were just a few weeks ago. Recently, large cap growth stocks have been joined by a chorus of other areas of the stock market that have been making new highs, that includes smaller companies. This is a good sign for the stock market in the short term, but we are not yet out of the woods.
On Wednesday of this week, the FOMC will consider whether to raise short term interest rates. The majority of analysts do not expect the Fed will raise interest rates at this time, though, further hikes are expected later this year. This lack of concern for rising interest rates can be seen in the bond market where rates remained in the same range they have been in over the past six years. Increasing employee wages are believed to be one of the leading indicators of rising inflation, but so far this has not materialized.
Though we are currently in the summer months when many on Wall Street are on vacation, and stock prices usually drift sideways, we are encouraged by both the corporate earnings results, so far this season, along with investor’s buying the dips.
Laif Meidell, CMT
We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster
Weekly Economic Update
WILL STOCKS GET AN EARNINGS BOOST?
While the first full week of the Q2 earnings season saw no pronounced rallies, there were also no shocks. By Friday’s closing bell, 20% of S&P 500 member firms had reported calendar Q2 results, and a FactSet analysis showed 77% had topped sales projections and 73% had beaten earnings-per-share forecasts – a good sign in an earnings-driven market climate. The Nasdaq Composite gained 1.19% last week and settled at 6,387.75 Friday; the S&P 500 rose to 2,472.54 after a 5-day gain of 0.54%. As blue chips fell 0.27% across five trading days, the Dow Jones Industrial Average closed at 21,580.07 Friday. All three indices hit record highs during the week.1,2
CONSTRUCTION ACTIVITY SURGED IN JUNE
According to a new Census Bureau report, housing starts rose 8.3% last month, while building permits were up 7.4%. That counteracts the 2.8% fall for starts and the 4.9% drop for permits in May.3
GOLD TOPS $1,250
Settling at $1,254.90 Friday, the yellow metal hit its highest COMEX close since June 23, up 2.2% in five days. Silver rose 3.3% last week to a Friday close of $16.46.4
On Monday, Alphabet, Anadarko Petroleum, Celanese, Halliburton, Hasbro, and Stanley Black & Decker present earnings, and Wall Street also considers June existing home sales numbers. Tuesday offers a new Conference Board consumer confidence index and earnings from 3M, AT&T, Ameriprise Financial, Amgen, Biogen, Caterpillar, Chipotle, Chubb, Domino’s, Eli Lilly, Express Scripts, Freeport-McMoRan, General Motors, JetBlue, McDonald’s, Mondelez, PulteGroup, Quest Diagnostics, Smart & Final, Supervalu, Texas Instruments, U.S. Steel, and Universal Health. The Federal Reserve makes a policy statement Wednesday; investors will also look at June new home sales data and earnings from Anthem, Boeing, Coca-Cola, Corning, D.R. Horton, Discover, Facebook, Ford Motor Co., General Dynamics, Gilead Sciences, Hilton Worldwide, Ingersoll-Rand, O’Reilly, PayPal, Public Storage, Rent-A-Center, Rockwell Automation, Ryder System, State Street, Waste Management, West Marine, Whirlpool, and Whole Foods. Data on initial claims and June hard goods orders appears Thursday, plus earnings from Aflac, Ally Financial, Altria Group, Amazon, Baidu, Bristol-Myers Squibb, ConocoPhillips, Dow Chemical, Dr. Pepper Snapple, Dunkin’ Brands, Edison International, Expedia, Intel, Procter & Gamble, Raytheon, Revlon, Southwest Airlines, Spirit Airlines, Starbucks, Twitter, UPS, Valero Energy, Verizon, W.R. Grace, and Xerox. July’s final University of Michigan consumer sentiment index and the first Q2 GDP estimate appear Friday, plus earnings from American Airlines, Chevron, ExxonMobil, Magellan Health, and Merck.