Year: 2018

Despite opening the week with a loss of 1.5 percent, the Nasdaq rose 1.37 percent on the week after Apple (AAPL) delivered a strong earnings report.

Apple iPhone sales were flat in its fiscal third quarter versus a year-ago, but the average sales price jumped 20 percent, from $606 to $724 as sales of the more expensive iPhone X increased. Apple gained 8.91 percent for the week.

The July employment report missed expectations with 157,000 new jobs versus 195,000 expected. The closing of all Toys R Us stores caused a 31,000-job decline, or more than 80 percent of the miss. Average hourly earnings increased 0.3 percent, beating expectations, but the 12-month increase remains subdued at 2.7 percent.

June factory orders were in line with expectations of 0.7 percent growth. Motor vehicle sales slowed to an annualized pace of 16.8 million after automakers reduced their discounts in July. The Federal Reserve held rates steady, as expected, but upgraded its description of the economy to “strong.” The odds of a September rate hike climbed to 94 percent and the December odds hit 69 percent.

This week President Trump said the third round of tariffs on $200 billion of Chinese goods (round two hasn’t officially been implemented yet) could be as high as 25 percent, up from the initial 10 percent. The Chinese stock market and currency weakened all week. iShares China Large-Cap (FXI) fell 2.97 percent. Xtrackers Harvest CSI 300 China A-Shares (ASHR) declined 5.66 percent. China moved to defend the currency on Friday by raising margin requirements on forex traders. The yuan rebounded from 6.91 to 6.84 versus the U.S. dollar. China also retaliated with a list of $60 billion in U.S. goods that will be hit with tariffs should the U.S. follow through on its tariff threats. Among the goods targeted are liquefied natural gas, many agricultural products, machinery, natural resources, sports equipment, autos and auto parts.

The 10-year treasury yield spiked on the Fed’s policy statement mid-week but reversed the gains on Friday following the employment report. Crude oil drifted lower on the week and closed at $68.60 per barrel. The U.S. Dollar Index spiked on Thursday and closed above 95 for the first time since June 28.

Caterpillar (CAT), Pfizer (PFE) and Proctor & Gamble (PG) delivered impressive earnings this week. iShares U.S. Pharmaceuticals (IHE) rallied 2.79 percent on the week and SPDR Healthcare (XLV) was the best performing sector fund with a 2.15-percent gain. SPDR Consumer Staples (XLP) returned 1.70 percent. Although Caterpillar boosted industrials, Boeing (BA) pulled SPDR Industrial (XLI) lower by 0.21 percent.

As of Friday, the S&P 500 Index had blended earnings growth of 24 percent in the second quarter. One-fifth of the index has yet to report. If growth holds through the end of earnings season, it will be the highest growth rate in 8 years.

FANG stocks pulled the technology and consumer discretionary sectors and the broader market lower on Monday. Facebook (FB) fell 2.19 percent on the day, Amazon (AMZN) 2.06 percent, and Netflix (NFLX) 5.71 percent. Financials, materials, and energy were positive for most of the day, while healthcare and consumer staples held up well. SPDR Technology (XLK) declined 1.53 percent on the day and SPDR Consumer Discretionary (XLY) slid 0.78 percent. SPDR Financials (XLF) rose 0.04 percent.

The Federal Reserve’s policy statement is due out on Wednesday. The odds of a fourth rate hike at the December meeting has hit 70 percent, benefiting the financial sector.

The Bank of Japan will issue its policy statement on Tuesday. For the third time in the past week, the BoJ offered to buy unlimited Japanese government bonds to stabilize interest rates. Long-term yields have risen in anticipation of a BoJ policy shift. Analysts forecast the Bank of England will hike interest rates by 25 basis points.

Pending home sales rose 0.9 percent in June, beating expectations. The Conference Board will release its consumer confidence index for July. Analysts see it rising from June. The PMIs for various nations will also be out this week. The U.S. should remain relatively strong. Markets are likely to focus on Europe and China, two regions that have seen a slowdown in recent months.

Auto sales for July will be out on Wednesday. The consensus is looking for 17.1 million annualized, down from June’s surprisingly high 17.5 million annualized pace. Friday will bring the unemployment report for July. Economists predict 193,000 new jobs were created last month with the unemployment rate falling back to 3.9 percent.

Crude oil climbed above $70 a barrel on Monday. The U.S. Dollar Index weakened against the euro and emerging-market currencies.

Earnings kicked off with a beat by Caterpillar (CAT). Shares gained on the day. There are 144 other S&P 500 companies reporting this week, including Apple (AAPL), Pfizer (PFE) and Proctor & Gamble (PG). Baidu (BIDU), Illumina (ILMN), Simon Property Group (SPG), Tesla (TSLA), T-Mobile US (TMUS), MetLife (MET), Express Scripts (ESRX), Prudential Financial (PRU), DowDuPong (DWDP), EOG Resources (EOG), Aetna (AET), Kraft Heinz (KHC) and Enbridge (ENB) will also report.