Market Perspective for July 30, 2018

FANG stocks pulled the technology and consumer discretionary sectors and the broader market lower on Monday. Facebook (FB) fell 2.19 percent on the day, Amazon (AMZN) 2.06 percent, and Netflix (NFLX) 5.71 percent. Financials, materials, and energy were positive for most of the day, while healthcare and consumer staples held up well. SPDR Technology (XLK) declined 1.53 percent on the day and SPDR Consumer Discretionary (XLY) slid 0.78 percent. SPDR Financials (XLF) rose 0.04 percent.

The Federal Reserve’s policy statement is due out on Wednesday. The odds of a fourth rate hike at the December meeting has hit 70 percent, benefiting the financial sector.

The Bank of Japan will issue its policy statement on Tuesday. For the third time in the past week, the BoJ offered to buy unlimited Japanese government bonds to stabilize interest rates. Long-term yields have risen in anticipation of a BoJ policy shift. Analysts forecast the Bank of England will hike interest rates by 25 basis points.

Pending home sales rose 0.9 percent in June, beating expectations. The Conference Board will release its consumer confidence index for July. Analysts see it rising from June. The PMIs for various nations will also be out this week. The U.S. should remain relatively strong. Markets are likely to focus on Europe and China, two regions that have seen a slowdown in recent months.

Auto sales for July will be out on Wednesday. The consensus is looking for 17.1 million annualized, down from June’s surprisingly high 17.5 million annualized pace. Friday will bring the unemployment report for July. Economists predict 193,000 new jobs were created last month with the unemployment rate falling back to 3.9 percent.

Crude oil climbed above $70 a barrel on Monday. The U.S. Dollar Index weakened against the euro and emerging-market currencies.

Earnings kicked off with a beat by Caterpillar (CAT). Shares gained on the day. There are 144 other S&P 500 companies reporting this week, including Apple (AAPL), Pfizer (PFE) and Proctor & Gamble (PG). Baidu (BIDU), Illumina (ILMN), Simon Property Group (SPG), Tesla (TSLA), T-Mobile US (TMUS), MetLife (MET), Express Scripts (ESRX), Prudential Financial (PRU), DowDuPong (DWDP), EOG Resources (EOG), Aetna (AET), Kraft Heinz (KHC) and Enbridge (ENB) will also report.

 

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