Market Perspective for July 13, 2020

The Dow Jones Industrial Average gained 0.04 percent on the day. The Nasdaq lost 2.13 percent, while the S&P 500 declined 0.94 percent. The Russell 2000 retreated 1.34 percent.

SPDR Healthcare (XLV) gained 0.57 percent on Monday, SPDR Financials (XLF) 0.43 percent and SPDR Industrials (XLI) 0.41 percent. Invesco QQQ (QQQ) slipped 2.06 percent.

Shares of Tesla rallied to near $1800 per share on Monday before closing at $1497 per share.

Economic data out this week includes the National Federation of Independent Businesses’ small-business index for June. The reading was 94.4 in May.

Economists predict the June consumer price index will rise 0.5 percent. They forecast for initial jobless claims fell to 1.24 million in the week ended July 11.

Retail sales for June are out on Thursday. Analysts predict an increase of 5.3 percent from May.

Several housing data points are out later in the week. The National Association of Home Builders’ confidence index for July, plus housing starts and building permits in June.

The last item this week is the University of Michigan’s advance reading of consumer sentiment for July. Analysts are looking for a slight uptick from the final June reading.

Earnings season kicks off this week with the major banks. J.P. Morgan (JPM), Citigroup (C), Wells Fargo (WFC) and Frist Republic Bank (FRC) reporting on Tuesday along with Delta Air Lines (DAL), Fastenal (FAST) and American Movil (AMX).

Wednesday brings Goldman Sachs (GS), UnitedHealth Group (UNH), U.S. Bancorp (USB), PNC Financial Services (PNC), ASML Holdings (ASML), Progressive (PGR), Bank of New York Mellon (BK) and Alcoa (AA).

On Thursday, Netflix (NFLX), Bank of America (BAC), Taiwan Semiconductor (TSM), Morgan Stanley (MS), Johnson & Johnson (JNJ), Dominos Pizza (DPZ), Abbott Labs (ABT), Charles Schwab (SCHW) and J.B. Hunt (JBHT) all report

Several regional banks report on Friday, including Citizens Financial Group (CFG), Regions Financial (RF) and First Horizon National (FHN), in addition to railroad Kansas City Southern (KSU) and homebuilder NVR Inc. (NVR).

 

Market Perspective for July 3, 2020

Equities rallied over the holiday shortened trading week. Strong economic data and Federal Reserve intervention boosted investor sentiment. The Nasdaq increased 4.65 percent, the S&P 500 Index 4.04 percent and the Dow Jones Industrial Average 3.26 percent.

SPDR Consumer Discretionary (XLY) gained 4.65 percent, SPDR Industrials (XLI) 4.29 percent and SPDR Healthcare (XLV) 4.23 percent.

Economic data was better than expected. The ISM manufacturing PMI moved back into expansion in June. Pending home sales spiked 44.3 percent in May, more than making up for the 21.8 percent drop in April.

Consumer confidence jumped to 98.1 in June, up from 85.9 in May according to the Conference Board survey. This was far ahead of the 90.8 consensus forecast. The survey asks how confidence consumers are about the coming six months.

The unemployment rate fell to 11.1 percent in June according to the Bureau of Labor Statistics. Economists had forecasted a rate of 12.5 percent. New jobs hit 4.8 million, more than 1 million higher than expectations. Leisure and hospitality saw 2.1 million new jobs as the country reopened restaurants and bars.

Bond funds gained this week as the Federal Reserve initiated its final bond buying facility. The Primary Market Corporate Credit Facility allows the Fed to buy bonds, up to 100 percent of an issue, directly from corporations. In effect, it allows companies to borrow directly from the Federal Reserve. iShares iBoxx High Yield Corporate Bond (HYG) climbed 1.40 percent, iShares iBoxx Investment Grade Corporate Bond (LQD) 1.40 percent and Fidelity Corporate Bond (FCOR) 1.12 percent.

iShares MSCI Emerging Markets (EEM) advanced 3.53 percent and iShares MSCI EAFE (EFA) 2.13 percent. Both the House and Senate unanimously passed mandatory sanctions on Chinese officials and businesses that transact with them following the passage of the new national security law. China began arresting dissidents and government critics this week, for violations such as holding protest signs.

FedEx (FDX) delivered far better than expected earnings this week. Analysts were looking for $1.52 per share, but FedEX delivered $2.53 per share. Shares jumped 19.58 percent for the week.