Markets “In a Nutshell” for July 16, 2019

Investment Week at a Glance

Stocks finished mostly up for the week.  The Dow Jones Industrial Average was up 1.52%, the S&P 500 rose 0.78 %, the New York Stock Exchange Composite (2,000 stocks) rose 0.18% and the average investors index (Value Line Index) was down 0.01%.  Foreign stocks (DJ Global ex U.S.) were down 0.59%.  Bond prices were down for the week, pushing the yield on the 10-year U.S. Treasury up 11 basis points to end the week at 2.11%.  (Data source: Wall Street Journal)

Stocks Continue to Climb Higher

The S&P 500 finished the week over the 3,000 mark for the first time ever and has continued to add gains despite the same relentless uncertainties that have clouded the outlook for the near term. Federal Reserve chairman Jerome Powell spoke this past week and all but assured a quarter point rate cut was coming at the end of the month, despite mediocre to positive data being reported that supports more of a pause. Recession fears have largely subsided for this year and most investors see the recent slowdown as a return to the lackluster growth of previous years rather than a much more dramatic fall. Fed communication will be important at the next meetings from July 30-31 and recent stock price records may depend on a continuation of accommodative policies.  (Wall Street Journal)

Earnings Season

56 of the S&P 500 companies will start off the 2nd quarter earnings reporting season this week as the analyst consensus is that the earning will actually drop 2.7% this quarter on a year/year basis. That would be the biggest drop since 2016 and the first negative figure in the recent economic surge. Fortunately, most companies tend to beat earnings estimates by about 3.7% on average over the last 5 years, so there is a chance that the earnings growth cycle continues. Even more important than earnings may be companies’ forward guidance on their outlook of the economy. With the China trade war and slower global economic growth outlook, these companies’ could help determine whether the new record highs are sustainable. (Barron’s)

Quiz:

What was the best performing S&P 500 sector in the 2nd quarter?

a)    Financials

b)   Information Technology

c)    Real Estate

d)   Utilities

 

Answer is below…

 

Have a good week!

 

 

 

Answer to quiz:

a)    Financials.  The S&P 500 sector that performed the best in the 2nd quarter was Financials at 8.00% (Morningstar)