Market Perspective for July 21, 2017

Several indexes hit new all-time highs this week, led by a 1.19-percent Nasdaq gain. Earnings were largely positive for stocks, and investors focused on growth and guidance as well. Netflix (NFLX) missed earnings, but more than doubled estimates for new subscriptions and Microsoft (MSFT) beat estimates by 38 percent. SPDR Technology (XLK) gained 1.07 percent on the week.

The Dow Jones Industrial Average, however, dipped 0.27 percent following disappointing General Electric (GE) earnings.

Initial claims for unemployment fell below estimates to 233,000 last week. Housing starts and building permits increased more than expected in June, and May figures were revised higher. iShares U.S. Home Construction (ITB) hit a new 52-week high.

Amazon (AMZN) announced the sale of Sears’ Kenmore appliances this week, pushing shares of Lowe’s (LOW) and Home Depot (HD) down 3 and 4 percent on the week. This comes a month after Amazon announced it would buy Whole Foods (WFM), initiating double-digit losses for several supermarket stocks. SPDR Consumer Discretionary (XLY) finished the week with a gain of 1.04 percent nonetheless.

UnitedHealth Group (UNH) earned $2.46 per share, 8 cents ahead of estimates. Shares rallied to a new all-time high following the news. Johnson & Johnson (JNJ) also exceeded estimates and raised guidance for the year. SPDR Healthcare (XLV) gained 1.06 percent this week and hit a new all-time high. Biotechnology and pharmaceutical shares also resumed the breakout that began in mid-June. Several major biotech firms will report next week. iShares Nasdaq Biotechnology (IBB) climbed 2.68 percent.

Earlier in the week, Lockheed Martin (LMT) and iShares U.S. Aerospace & Defense (ITA) both hit new all-time highs following Lockheed’s earnings report.

Energy remains the weak spot in the stock market, with crude oil struggling to hold the $47 level. Crude failed at that price at the start of July. The mining sectors grew 21.6 percent in the first quarter according to the Bureau of Economic Analysis.

The 10-year Treasury yield declined to 2.2 percent this week, lifting rate- sensitive sectors. SPDR Utilities (XLU) returned 2.64 percent. SPDR Consumer Staples (XLP) increased 0.66 percent. The U.S. Dollar Index fell below 94 as the euro rallied.

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