Light Week as Markets Eye Forthcoming Fed, PCE Data. July 21 Market Recap.
Indices
- Dow 35,227, +718 or +2.08%.
- Nasdaq 14,032, -81 or -0.57%.
- MSCI EAFE 2176.58, -12.41 or -0.57%.
- S&P 4,536, +31 or +0.69%.
- USD10Y 3.837%, +1.8bp or +0.47%.
- WTI Crude $76.83 bbl, +$1.56 or +2.07%.
Light Week as Markets Eye Forthcoming Fed, PCE Data
It was a light week of action as investors eyed next week’s Fed’s press conference on Wednesday and Friday’s Personal Consumption Expenditure data, the Fed’s preferred measure of inflation.
The first full week of earnings contained few surprises as companies reported generally better-than-expected results. Next week 150 S&P 500 companies are due to report including Meta Platforms (META), Amazon (AMZN), Boeing (BA), Intel (INTC) and Coca-Cola (KO), Exxon Mobile (XOM) and Chevron (CVX).
Economic data was mixed: manufacturing is still struggling as the New York data was middling and the Philadelphia data is still contracting. Retail sales, while missing expectations and lower than last month’s print, were somewhat misleading as a decline in gasoline prices disguised a more robust number. June Leading Economic Indicators were also negative and were slightly worse than May’s numbers as well.
Next Week
More important than the Fed’s interest rate decision on Wednesday (which is widely expected to be a 25bp hike), will be what Fed Chair Powell says in his statement and in his answers during the subsequent press conference. This week’s less than stellar economic data combined with rapidly falling CPI and PPI should help the FOMC define how many more rate hikes the market should expect. On Friday, the PCE data will shine further light on the Fed’s battle against inflation.
Economic Calendar
- Monday – July Flash S&P U.S. Manufacturing and Services PMI. Earnings: N/A.
- Tuesday – July Consumer Confidence. Earnings: Alphabet (GOOGL), Microsoft (MSFT), General Motors (GM), Visa (V).
- Wednesday – FOMC Rate Hike Decision. Earnings: Meta Platforms (META), Boeing (BA), Chipotle Mexican Grill (CMG), Coca-Cola (KO), Lam Research (LRCX).
- Thursday – Initial Jobless Claims, June Durable Goods Orders, Q2 GDP. Earnings: Amazon (AMZN), Intel (INTC), Ford Motor (F), Mastercard (MA), McDonalds (MCD).
- Friday – June PCE. Earnings: Exxon Mobile (XOM), Chevron (CVX).
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July 21 Daily Trading Recap…
Monday – Dow +76 to 34,585, Nasdaq +131 to 14,244, S&P +17 to 4,522, USD10Y -2.4bp to 3.797%.
- Six of eleven S&P sectors traded down, led lower by Utilities, Real Estate, and Communication Services.
- July Empire State Manufacturing fell from June’s 6.6 print but stayed in the positive at 1.1 and beat expectations of 0.
Tuesday – Dow +366 to 34,951, Nasdaq +108 to 14,353, S&P +32 to 4,554, USD10Y -0.8bp to 3.789%.
- Eight of eleven S&P sectors traded higher, led by Technology, Financials, and Energy.
- June Retail Sales were lower than expected at +0.2% vs +0.5% expected and vs last month’s +0.5% print.
- Earnings: Bank of America (BAC) beat top and bottom-line estimates; BAC traded up +4.42%. Charles Schwab (SCHW) beat earnings and revenue estimates and traded +12.57% higher. Shipping and logistics company JB Hunt (JBHT) missed both their top and bottom-line estimates; JBHT still traded up +2.27% after hours. Defense company Lockheed Martin (LMT) beat both top and bottom-line estimates but traded down -3.04% during the regular session.
Wednesday – Dow +86 to 34,347, Nasdaq +158 to 13,918, S&P +32 to 4,472, USD10Y +7.2bp to 3.861%
- Eight of eleven S&P sectors traded higher, led by Real Estate, Utilities, and Consumer Staples.
- Earnings: Netflix (NFLX) beat earnings estimates, increased subscriptions by +8% but missed on revenues; NFLX traded down -8.14% post-close. Tesla (TSLA) beat earnings, recorded record quarterly revenues, but reported lower gross margins; TSLA traded down -4.19% in the extended session. Goldman Sachs (GS) missed on earnings, beat on revenues, and noted sharp declines in trading, and investment banking, as well as sizable write downs of its real estate holdings and its sale of financing unit GreenSky; GS traded up +0.97 in the regular session. International Business Machines (IBM) fell short of revenue estimates but beat earnings projections on better-than-expected margins. CEO, Arvind Krishna noted the significance of AI several times. IBM fell -1.02% post close. United Air (UAL) announced record earnings on lower fuel costs and strong demand for international travel, beat revenue estimates, and raised its fiscal forecast for the year; UAL traded up +3.25% in the extended session.
Thursday – Dow +163 to 35,225, Nasdaq –294 to 14,063, S&P -30 to 4,534, USD10Y -0.7bp to 3.854%.
- Seven of eleven S&P sectors traded higher, led by Utilities, Healthcare, and Energy.
- Jobless claims fell again to 228,000 vs the 242,000 forecast and last week’s unrevised print of 239,000.
- June Philadelphia Federal Manufacturing Index missed expectations at –13.5 vs 10.0 but improved slightly vs last month’s -13.7 print.
- June Leading Economic Indicators fell to –0.7% vs last month’s -0.6% print.
- Earnings: American Air (AAL) beat earnings estimates handily, announced record revenues and boosted their earnings forecast for the year, echoing United Air’s comments on strong demand for international travel: AAL traded down –6.24% during the regular session. Rail transportation company CSX (CSX) missed on revenues and reported inline earnings; CSX traded down –4.84% in the extended session. Johnson and Johnson (JNJ) blew out their earnings and revenue estimates on strength from their medtech business; JNJ traded up +6.07% during the normal session.
Friday – Dow +2 to 35,227, Nasdaq -30 to 14,032, S&P +1 to 4,536, USD10Y –1.7bp to 3.837%.
- Seven of the eleven S&P sectors traded higher today, led by Utilities, Healthcare, and Energy.
- Earnings: American Express (AXP) missed revenue expectations but beat on earnings; AXP traded down –3.89% during the regular session.
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.