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It was good week in the stock market with all major market indexes showing gains, even though Friday was a down day. Friday’s second-quarter earnings report from Snap caused the Nasdaq to drop 1.9 percent.

Snap reported that revenue per user fell 4.5 percent year-over-year, and they were not going to provide guidance for the third quarter due to the current financial climate. Snap blamed this on competition from TikTok, Apple’s iOS 2021 update, and slowing demand for its online platform.

Shares of Snap fell 39 percent on Friday and are now down almost 65 percent for the year. Tech stocks have been heavily sold this year, with Meta (Facebook) down 45 percent and Amazon down more than 25 percent year-to-date. Shares of Netflix are down 63 percent for the year. Netflix reported Tuesday they lost nearly 1 million subscribers during the second quarter, which was less than the forecasted 2 million.

Verizon reported second-quarter earnings on Friday and lowered guidance for the year. They now expect their wireless service to increase from 8.5 percent to 9 percent for the year, instead of the previously expected growth rate of 9 percent to 10 percent. They expect growth from service and other revenue will range from flat to down by 1 percent.

Shares of Verizon (VZ) lost 7 percent on Friday to close at $44.45, a new 52-week low and a year-to-date loss of 14.45 percent.

Despite Friday’s losses, the Dow Jones Industrial Average was up 2.0 percent, the S&P 500 gained 2.6 percent, and the Nasdaq was up 3.3 percent last week. Year-to-date, the Dow is down 12.2 percent, the S&P 500 is down 16.9 percent, and the Nasdaq is still down by 24.4 percent.

According to Factset, the second quarter earnings are starting to look weaker than anticipated. On a year-over-year basis, the S&P 500 has reported the lowest earnings growth since the fourth quarter of 2020. The number of S&P 500 companies that have reported positive earnings surprises is below their five-year average.

Six of the 11 stock market sectors have reported year-over-year earnings growth, with the energy and industrial sectors leading the way. Out of the five sectors reporting a decline in earnings, financials are down the most.

The recent rally in stocks has been encouraging, though these rallies are not uncommon in a bear market. Each stock market rally this year has been accompanied by a pullback in the 10-year yield.

Also helping has been the sharp drop in commodity prices, which should continue to help with inflation. Oil prices are now down 20 percent from the recent peak, copper is down 32 percent, and lumber is down 60 percent.

Last week, Russia and Ukraine signed a deal supported by the United Nations that will allow grain exports from Ukraine to resume through the Black Sea. But on Saturday, Russian missiles damaging the Black Sea port of Odesa. It appears that this puts the grain deal in question.

Existing home sales for June fell 5.4 percent from May, the same amount they fell in May 2020. Even though sales fell, the price of homes hit another record high. The national median price for a previously owned sits at $416,000, an increase of 13.4 percent year-over-year.

Sales declined to 5.12 million homes in May, which is 14.2 percent lower than in June 2021. Outside of the pandemic, this is the slowest sales pace since January 2019.

There were 1.26 million homes on the market at the end of June, an increase of 2.4 percent over last June and the first year-over-year gain since 2019. At this sale pace, inventory is now at a three-month supply, which is still considered low.

According to Freddie Mac, the average rate for a 30-year fixed rate mortgage is at 5.54 percent, up 0.03 percent since last week.

Next week will be possibly the most important week of the summer for the stock market and bond market with earnings, economic news, and the Federal Reserve meeting. The second quarter gross domestic product will be released on Thursday. On Friday morning, the personal consumption expenditures inflation data comes out along with the employment cost index. On Tuesday and Wednesday, the Fed is meeting. The market expects a 75-basis point rate hike.

The main news was the release of the consumer price index (CPI), which was higher than expected. The stock market reacted to the bad news, but not as much as some feared. Most are taking this as a sign that the markets are pricing in more interest rate increases and a slowing economy.

The major market indexes closed lower on Wednesday after the CPI was released. The Dow Jones Industrial Average closed down 0.7 percent, the S&P 500 fell 0.5 percent, and the Nasdaq Composite closed slightly lower by 0.2 percent.

A stronger-than-expected retail sales report helped the markets rally on Friday, with the Dow gaining 2.15 percent, the S&P 500 rising 1.92 percent, and the Nasdaq up by 1.79 percent.

Friday’s rally wasn’t enough to keep the major market indexes from closing slightly lower for the week. The Dow ended the week off by 0.2 percent, S&P 500 was down 0.9 percent, and the Nasdaq closed down 1.6 percent.

All three indexes remain negative for the year, with the Dow lower by 13.9 percent, the S&P 500 down 18.9 percent, and the Nasdaq down 23.6 percent.

As if consumers didn’t already know, prices soared by 9.1 percent from a year ago, more than the expected 8.8 percent estimate. That makes it the fastest inflation increase since November 1981. On a monthly basis, the consumer price index (CPI) rose 1.3 percent from the previous month.

Taking out the more volatile food and energy prices, the core CPI increased 5.9 percent compared to a year ago and increased 0.7 percent from the previous month. Both numbers were above estimates.

Core inflation peaked last March at 6.5 percent and has been edging down ever since. These numbers appear to show that inflation may have peaked.

But as other economists are pointing out, the rise in prices is increasing across a broader range of products. The increase was led by the spike in energy and food prices, which has been a global problem. But prices are also rising in domestic goods and services like shelter, autos, and clothing.

Energy prices again led the way with an increase of 7.5 percent for the month and up 41.6 percent on a 12-month basis. Food increased by 1 percent, shelter costs increased by 0.6 percent overall, but the cost of rentals was up by 0.8 percent, the largest monthly increase since April 1986. Shelter costs make up about one-third of the CPI.

A good portion of the inflation increase is from gasoline prices, which rose 11.2 percent for the month and almost 60 percent for the 12-month period. Electricity costs increased by 1.7 percent for the month and 13.7 percent for the 12-month period. Gasoline, which was over $5 per gallon, has fallen to a national average of $4.58.

Overall, medical costs increased by 0.7 percent for the month, driven by a 1.9 percent increase in dental services, which is the largest monthly increase for that sector going back to 1995.

Commodities are starting to cool off, another sign that inflation has peaked. Oil dropped 7.1 percent for the week but is still higher by 29.4 percent for the year. Oil is down 22 percent from its peak high, natural gas down 28 percent, copper down 34 percent, wheat is down 44 percent, and lumber is down 62 percent from its peak price.

The yield curve inverted when the 2-year Treasury jumped to 3.13 percent, while the 10-year Treasury fell to 2.91 percent. The inversion between the two is at the widest level since 2000. Many economists believe that a yield curve inversion signals an upcoming recession.

The economy continues to be robust, and consumer spending is holding up. Retail sales for June were up 1 percent, better than the estimated gain of 0.9 percent. The increase is a turnaround from the decline of 1 percent in retail sales for May.

The housing market is showing signs of cooling off as more Americans canceled their agreements to buy an existing home. Out of all the homes under contract, 15 percent of the contracts were canceled. In comparison, a year ago, the rate was about 11 percent. Homebuilders are also seeing a cancellation rate of about 9.3 percent, compared to 6.6 percent a year ago.

The jump in cancellations could be caused by higher mortgage rates and rising inflation as potential homebuyers are reconsidering buying a home at this time. The average rate on the 30-year fixed mortgage is at 5.51 percent, up 21 basis points last week and up 2.63 percent from last year.

The labor market remained tight even though the number of new claims for unemployment benefits increased by 9,000 to 244,000, the highest it’s been since November 2021.

JP Morgan reported earnings last week, which caused its stock to fall almost 5 percent on Thursday, hitting a new 52-week low for the bank. Earnings per share came in at $2.76 versus an expected $2.88. Revenue was slightly below estimates at $31.63 billion. They also announced they have suspended share buybacks.

Citigroup beat expectations last week when they posted earnings of $2.19 per share versus an expected $1.68. Revenue was $19.64 billion vs. $18.22 billion expected. After the earnings announcement, the shares jumped 13 percent.