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Equities rallied for the week after a brief sell-off on Monday. The Nasdaq saw the best return, rising 2.84 percent, while the Russell 2000 Index climbed 2.15 percent, the S&P 500 Index 1.96 percent and the Dow Jones Industrial Average 1.08 percent.

Earnings season was strong again. The blended earnings growth rate of the S&P 500 Index climbed to 74.2 percent. Nearly 90 percent of companies have beat earnings expectations.

The National Association of Home Builders said its homebuilder confidence index was at 80 in July, down one point from June. Existing home sales were strong in June at an annualized pace of 5.86 million though.

The economy is on solid footing, but growth probably peaked in the second quarter with most businesses having reopened. The July flash manufacturing PMI was up slightly and beat expectations, but the service PMI (which includes bars, restaurants and tourism) came in much lower than forecast.

Initial jobless claims climbed above 400,000 for the week ending July 17, but continuing claims continued falling.

Crude oil rebounded to $72 per barrel this week after hitting $66 on Monday. Natural gas climbed to $4.03 per mmBTU. Over the past 5 years, the only time natural gas was more expensive was during a brief period in late 2019.

Following three weeks of gains, equities closed the week lower across the board. Treasury yields also dipped for the third consecutive week.  Growing concerns over rising inflation and the potential for sustaining the pace of economic expansion gave investors pause. However, substantially improved retail sales for June over projections helped balance out the lagging consumer sentiment over increased prices across many categories.

The Dow Jones Industrial Average dropped 0.9 percent on Friday, the S&P 500 Index lost 0.8 percent, and the Nasdaq Composite also fell 0.8 percent. The MSCI World index likewise lost 0.6 percent on the day. The Russell 2000 small-cap index dropped 1.2 percent on Friday.

For the week all major indexes posted losses with the Dow down 0.9 percent, the S&P 500 1.0 percent, and the Nasdaq 1.9 percent. The Russell 2000 Index declined 5.41 percent on the week.

The notable market winner on Friday was Moderna (MRNA), one of the COVID-19 vaccine manufacturers. Moderna shares shot up 10.3 percent after the announcement that it will take over Alexion Pharmaceuticals (ALXN) in the S&P 500 Index as of Wednesday.

June’s retail sales figures came out better than expected on Friday. Instead of the forecasted 0.3 percent decline over the previous month, advance retail sales climbed 0.6 percent for June. Consumer auto sales also beat monthly expectations, with a rise of 1.3 percent, which beat the expectation of a 0.4 percent increase.

The University of Michigan Consumer Sentiment Index preliminary reading for July dropped to 80.8, which fell to its lowest-level over the past five months. It also lagged last month’s reading of 85.5. It was reported that the one-year inflation expectations have been revised upward to 4.8 percent, up from the 4.2 percent rate for June. Updated forecasts for the five to 10-year inflation rate inched up to 2.9 percent over 2.8 percent as of June.

On Friday, WTI crude oil prices rose by $0.16 to $71.81 a barrel. The gold spot price dropped $17.50 to $1,811.40 an ounce. The U.S. Dollar Index was up by 0.1 percent on Friday to 92.72.

The 10-year Treasury note yield fell to 1.3 percent to close the week.

Federal Reserve Chairman Jerome Powell issued public remarks this week conveying the Fed’s view that the rise in consumer prices is expected to be temporary while acknowledging that price increases was at least partly driving the decline in overall consumer sentiment.

Second quarter earnings reporting will pick up steam this week with reports due from Netflix (NFLX), Johnson & Johnson (JNJ) and American Express (AXP). In addition, the latest figures for housing and homebuilding activity levels along with preliminary readings for manufacturing and services sectors’ levels for July will be released.