Earnings Better, Important Week Looms (July 22 Market Recap)
Indices
Dow 31,899 +611 or +2.0%.
Nasdaq 11,834 +382 or +3.3%.
S&P 3,961 +98 or +2.5%.
USD10Y 2.783% (14.7bp) or (5.0%).
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Earnings Better Than Expected?
A great week was pared back some by Friday’s disappointing market action spurred by SNAP’s horrific quarter which dragged down many a technology stock during the last trading session of the week. Despite Friday’s action and some fairly average earnings reports accompanied by warnings of hiring and spending slowdowns (AAPL, MSFT, GOOG, LYFT), the market consensus seemed to be that much worse was expected. Decent numbers from Netflix and Tesla certainly buoyed that sentiment but the proof will be in the pudding this coming week when a barrage of tech companies are due to report.
Economic Data Worsens
June Existing Homes Sales missed as higher mortgage rates cut into demand. Jobless claims printed at 251,000 claims, the highest since November 13, 2021. Continuing claims also increased. June Leading Economic Indicators missed expectations. July Philadelphia Federal Manufacturing Index contracted for the second consecutive month. July S&P Global U.S. Services PMI (flash) disappointed. However, July S&P Global U.S. Manufacturing PMI (flash) was higher than expected.
Crude oil spiked and then closed below the level where it started the week. WTI crude ended the week at $95.09/bbl, down from last Friday’s $97.57 close. Gasoline prices fell further and are now down more than 25c/gallon since last month.
All of this is to say that it appears that the Fed’s desire to temper demand is working. The question will be whether the inflation reports will begin to confirm the rest of the data and give the Fed enough cover to reduce or even pause their rate hike cycle not next week, but perhaps at the next meeting, September 20-21.
Next Week
It’s an earnings tsunami next week with technology squarely in focus. On Wednesday, the Fed will announce what most observers expect to be a 75bp rate hike. On Friday, the much-anticipated June PCE report will be released. Last month, the MoM number was +0.3% for the fourth consecutive month and below expectations of +0.4%. Further, the YoY number was 4.7% vs the previous month’s 4.9%. As the Fed more heavily weighs the PCE number vs the CPI number, this will be an important data point.
Economic Calendar
- Monday – N/A
- Tuesday – July Consumer Confidence, June New Home Sales. Earnings: Microsoft (MSFT), Alphabet (GOOG), Coca-Cola (KO), McDonald’s (MCD), General Motors (GM), United Parcel Service (UPS), Chipotle Mexican Grill (CMG).
- Wednesday – June Durable Goods. FOMC interest rate decision. Earnings: Boeing (BA), Meta Platforms (META), Ford (F), Qualcomm (QCOM), Lam Research (LRCX).
- Thursday – Initial Jobless Claims, Q2 GDP First Release. Earnings: Apple (APPL), Amazon (AMZN), Intel Corp (INTC), Mastercard (MA).
- Friday – June PCE Inflation Index, Chicago PMI, July University of Michigan Consumer Sentiment final, July University of Michigan 5-year inflation expectations final.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
July 22 Daily Trading Recap…
Monday – Dow (215) to 31,072, Nasdaq (92) to 11,360, S&P (32) to 3,830, USD10Y +3.0bp to 2.96%.
- Eight of eleven S&P sectors traded down today, led lower by Energy, Technology, and Health Care.
- Earnings: Bank of America (BAC) beat earnings and revenue expectations yet traded flat on the day. International Business Machines (IBM) also beat top and bottom-line expectations but slashed their free cash flow estimate going forward and traded down 4.32%. Goldman Sachs (GS) crushed their numbers on strong trading results and traded up 2.51%. Charles Schwab (SCHW) beat their metrics and traded down 1.51%.
- Crude jumped on a retreating dollar and supply fears. WTI traded up 5.13% to close at $102.60/bbl.
- Apple (APPL) announced plans to slow hiring and spending on growth. The news reversed the markets which had been trading up smartly. APPL finished the day down 2.06%
Tuesday – Dow +754 to 31,827, Nasdaq +353 to 11,713, S&P +106 to 3,936, USD10Y +6.3bp to 3.023%.
- All eleven S&P sectors traded higher today, led by Communication Services and Industrials.
- Earnings: Johnson and Johnson (JNJ) beat expectations but cut their full year guidance and traded down 1.5%. Netflix (NFLX) was up strongly post close after beating earnings, missing revenues, but only losing about half as many subscribers as they had anticipated.
Wednesday – Dow +47 to 31,874 Nasdaq +184 to 11,897, S&P +23 to 3,959, USD10Y +1.3bp to 3.036%.
- June Existing Homes Sales missed at an annualized rate of 5.12 million vs expectations of 5.36 million and last month’s 5.41 million print.
- Earnings: Tesla (TSLA) beat earnings but missed their revenues and gross margin projections. United Airlines (UAL) lost less than expected but missed on revenues and the stock traded down 7% post close.
Thursday – Dow +162 to 32,036, Nasdaq +162 to 12,059, S&P +39 to 3,998, USD10Y (12.6bp) to 2.910%.
- Nine of eleven S&P sectors traded higher today, led by Consumer Discretionary, Health Care, and Technology.
- Jobless claims printed at 251,000 claims vs 240,000 expected and last week’s unrevised 244,000 print. Today’s number was the highest since November 13, 2021. Continuing claims increased to 1.38 million.
- WTI crude traded down 3.5% on resumption of supplies from Libya and Russia’s resumption of gas supplies to Europe. WTI settled at $96.35/bbl.
- June Leading Economic Indicators fell –0.8% vs expectations of –0.6%.
- July Philadelphia Federal Manufacturing Index contracted for the second consecutive month, down –12.3 vs expectations of +1.6.
- Earnings: American Airlines (AAL) met earnings and beat revenue expectations. AAL traded down 7.43% on news that the company will be scaling back capacity. Snap (SNAP) spiraled down 26% post close on missed revenues and earnings expectations.
Friday – Dow (137) to 31,899, Nasdaq (225) to 11,834, S&P (37) to 3,961, USD10Y (12.7bp) to 2.783%.
- Eight of eleven S&P sectors traded down, led lower by Communication Services, Technology, and Energy.
- July S&P Global U.S. Manufacturing PMI (flash) was 52.3 vs 52.2 expected and vs last month’s 52.7 reading.
- July S&P Global U.S. Services PMI (flash) was 47 vs 53 expected and vs last month’s 52.7 print.
- Earnings: American Express (AXP) traded up 1.88% after beating top and bottom-line estimates.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.