Market Perspective for August 4, 2017

The Dow Jones Industrial Average made five new all-time highs this week on its way to a gain of 1.19 percent. American businesses created 209,000 new jobs in July, beating the consensus estimate of 175,000. Unemployment fell to 4.3 percent. The labor force participation rate increased to 62.9 percent.

Earlier in the week, Apple (AAPL) reported $1.67 per share in earnings. The consensus estimate was $1.57 per share, the whisper number $1.61 per share. The technology sector increased to an all-time high. SPDR Technology (XLK) ended the week up 0.31 percent.

Industrials and financials were the best performing sectors, hence the Dow’s outperformance. SPDR Industrials (XLI) advanced 0.70 percent and SPDR Financials (XLF) rose 1.93 percent. Several insurers delivered earnings this week, but the sector was driven primarily by strong economic data and rising interest rates.

Weakness in consumer discretionary weighed on the Nasdaq. It dipped 0.36 percent this week following Amazon’s (AMZN) 3.18 percent decline on the week. SPDR Consumer Discretionary (XLY) slipped 0.40 percent.

Both manufacturing PMIs for July beat expectations. Motor vehicle sales increased to 16.7 million in July, up 0.3 million from June. Factory orders increased 3.0 percent in June, above expectations and far above May’s decline of 0.3 percent. The Atlanta Federal Reserve updated its third-quarter growth forecast to 3.7 percent on Friday.

Pending home sales rose 1.5 percent in June. Investors remain bullish on the homebuilder sector. iShares U.S. Home Construction (ITB) closed at a new 52-week high on Friday.

Defense & aerospace, financials, agribusiness, Japan currency-hedged, Europe, emerging market, oil refiners and India all made new 52-week highs.

Friday’s strong jobs report lifted the 10-year Treasury yield, but it was down on the week. Fidelity Corporate Bond (FCOR) hit a new 52-week high on Thursday before easing amid the jump in interest rates. Virtus Seix Floating Rate High Income (SAMBX) and Fidelity Floating Rate High Income (FFRHX) hit new 52-week highs as well.

The U.S. Dollar Index also bounced Friday, rising 0.9 percent. This bounce comes at the tail end of five consecutive down months, potentially signaling the start of a reversal in the greenback.

Crude oil hovered near $50 on Friday. Potential sanctions against Venezuela boosted prices early in the week. Oil inventory was mixed, with the API report showing a build in inventory and the government showing a smaller-than-expected increase. Energy shares retreated during the weak, with SPDR Energy (XLE) sliding 1.26 percent.

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