Month: July 2019

Equities opened the week mixed. The Dow Jones Industrial Average led the major indexes with a gain of 0.11 percent. The S&P 500 and NASDAQ declined 0.16 and 0.44 percent, respectively.

Real estate and utilities both increased on Monday ahead of a potential 25 basis point rate cut from the Federal Reserve. SPDR Utilities (XLU) and SPDR Real Estate (XLRE) climbed 0.52 percent and 0.38 percent, respectively. SPDR Healthcare (XLV) was strong as well, returning 0.41 percent.

The Federal Reserve meets this week on Wednesday. Speculators have placed 75 percent odds on a 25 basis point cut with the remainder betting on a 50 basis point cut. Economic data has turned up and the justification for a rate cut here is thin, unless the Fed is concerned about unseen liquidity risks or the potential for a much sharper slowdown in Europe and China. We would not be surprised to see a “hawkish” cut this week, with the policy statement offsetting some of the dovishness of a hike.

The Conference Board and University of Michigan will release their consumer confidence surveys for July this week. Given strong consumer spending data, analysts are looking for upticks in both. July motor vehicle sales are out on Thursday.  Manufacturing PMIs will also be released. Flash PMIs announced last week showed Germany slumping into a deeper manufacturing contraction. Economists expect the U.S. manufacturing sector remains in expansion.

The week concludes with the July unemployment report. Economists forecast 160,000 new jobs, unemployment declining to 3.6 percent and average hourly earnings rising 0.2 percent.

Beyond Meat (BYND), Illumina (ILMN), NXP Semiconductors (NXPI), DISH Network (DISH) and National Oilwell Varco (NOV) kicked off earnings on Monday. Illumina handily beat estimates, though it had guided lower earlier this month. Shares of Beyond Meat slumped after the company said insiders were looking to sell 3 million shares.

Apple (AAPL) headlines Tuesday’s earnings lineup. Also reporting are Pfizer (PFE), Advanced Micro Devices (AMD), Mastercard (MA), Proctor & Gamble (PG), Merck (MRK), Amgen (AMGN), Eli Lilly (LLY), Altria (MO), Celgene (CELG) and Gilead Sciences (GILD).

Wednesday brings Qualcomm (QCOM), Sprint (S), General Electric (GE), Twilio (TWLO), Occidental Petroleum (OXY) and CME Group (CME).

Allergan (AGN) and Verizon (VZ) headline Thursday earnings reports along with Square (SQ), DowDuPont (DWDP), Tableau Software (DATA), Shopify (SHOP), Cigna (CI), General Motors (GM), Etsy (ETSY), Wayfair (W) and Petrobras (PBR).

The week ends with oil giants Exxon (XOM) and Chevron (CVX), LyondellBasell (LYB), Noble energy (NBL), Newell Brands (NWL) and PG&E Corporation (PCG).

Equity indexes rallied to new all-time highs this week after several strong earnings reports. The Nasdaq advanced 2.26 percent, the Russell 2000 Index 2.03 percent, the S&P 500 Index 1.65 percent and the Dow Jones Industrial Average 0.14 percent.

Communication services outperformed on the week, with SPDR Communication Services (XLC) increasing 4.24 percent. Alphabet (GOOGL) returned more than 10 percent on Friday following its strong earnings report. Facebook (FB) also provided a strong report, while Twitter (TWTR) climbed 12.95 percent. Netflix (NFLX) rebounded nearly 10 percent off its lows for the week following disappointing earnings.

The financial sector delivered solid earnings with major banks and regional banks reporting. SPDR Financial (XLF) climbed 2.67 percent and SPDR S&P Regional Banking (KRE) jumped 3.83 percent. SPDR Technology (XLK) was also strong. It gained 2.34 percent.

Second quarter GDP growth was 2.1 percent, higher than many economist forecasts. The report was met with mixed reaction from economists, with personal consumption driving the increase.

Manufacturing PMIs may have slipped in Europe and the United States this month if advance PMI readings hold. Markit showed the U.S. PMI at 50.0, right on the line between expansion and contraction. Germany’s PMI fell deeper into contraction. The U.S. services PMI accelerated.

The European Central Bank responded to the weaker PMIs by signaling more rate cuts could be on the way, along with a restart of quantitative easing. The U.S. Dollar Index advanced 1.0 percent. iShares MSCI EAFE (EFA) was barely positive with a return of 0.02 percent, while iShares MSCI Emerging Markets (EEM) fell 0.40 percent.

Bond yields rebounded this week on strong economic and earnings news. The 10-year yield climbed to 2.08 percent. Crude oil was up slightly on the week to $56.20 per barrel.

McDonald’s (MCD), Coca-Cola (KO), Alphabet (GOOGL), Facebook (FB), Raytheon (RTN), Universal Health Services (UHS), Intel (INTC), Northrop Grumman (NOC), Kaiser Aluminum (KALU), Biogen (BIIB), Texas Instruments (TXN), Fifth Third Bancorp (FITB), Teradyne (TER), Visa (V), Harley-Davidson (HOG), Auto Nation (AN), Whirlpool (WHR) and Halliburton (HAL) were only a few of the hundreds of companies that beat earnings expectations. Seventy-seven percent of S&P 500 companies are beating estimates after two full weeks of earnings season. About 60 percent of the index has yet to report.

Equities rallied higher on Monday ahead of an important week of earnings reports. The Nasdaq led with an advance of 0.70 percent as Apple (AAPL) and Microsoft (MSFT) rose 2.29 percent and 1.32 percent, respectively. SPDR Technology (XLK) gained 1.15 percent on the day. The energy sector rallied due to geopolitical tensions. SPDR Energy (XLE) increased 0.48 percent.

Existing home sales for June are out on Tuesday. Analysts expect a number in line with May’s 5.34 million. New homes sales are projected to hit 640,000, up from 626,000 in May.

Flash PMIs for July will gain extra attention after the manufacturing PMIs slipped in June. Similar surveys created by the Federal Reserve also dipped in June but have rebounded higher in July.  Overseas PMIs will also be watched closely, particularly Germany which has been reporting a PMI below 50 for several months.

The gross domestic product for the second quarter will be announced on Friday.  Economists predict 2.1 percent growth. The New York and Atlanta Fed’s GDP models forecast less than 2 percent, while the St. Louis Fed’s latest prediction is 2.9 percent.

Earnings will dominate the week with dozens of mega-cap stocks reporting. Halliburton (HAL)  was a positive note for the beleaguered energy services sector with an earnings beat.

Visa (V), Coca-Cola (KO), Texas Instruments (TXN), Biogen (BIIB), Lockheed Martin (LMT), United Technologies (UTX) and Chipotle Mexican Grill (CMG) headline Tuesday earnings.

On Wednesday, investors will hear from Boeing (BA), Facebook (FB), Tesla (TSLA), AT&T (T), Caterpillar (CAT), Paypal (PYPL), Service Now (NOW), Freeport-McMoRan (FCX), United Parcel Service (UPS) and Ford Motor (F).

Thursday after the bell delivers a trio of tech giants: Amazon (AMZN), Alphabet (GOOGL) and Intel (INTC). Starbucks (SBUX), Comcast (CMCSA), Bristol-Myers Squibb (BMY), Raytheon (RTN) and 3M (MMM) also report.

The week ends with Abbvie (ABBV), McDonald’s (MCD), Phillips 66 (PSX), Twitter (TWTR), Illinois Tool Works (ITW), Colgate-Palmolive (CL) and Charter Communications (CHTR).