In July, stocks notched a solid gain. Investors looked beyond higher inflation figures and rising COVID19 cases, sending the DJIA up 1.25% and the S&P 500 up 2.27%. The Nasdaq lagged climbing 1.16%. Second Quarter corporate earnings proved to be a solid base of support. More than 91% of the 221 companies that reported beat Wall Street estimates. Companies reported strong top-line growth, topping analyst estimates by 24%. Markets continue to grind higher. Continue reading this market report for more info on how the overall market performed.
During the final week of the month, we heard from the FED that its near-zero interest rate policy would remain in place. The Federal Reserve reaffirmed that its monthly bond purchase program would continue until the Fed sees substantial progress in its inflation and employment goals. Some analysts have suggested that the Fed’s assessment of economic progress was potentially a hint that the tapering of bond purchases may be close.
Energy was the only industry sector that fall, declining 5.68%. Gains were posted in Communication Services (1.92%), Consumer Discretionary (3.26%), Consumer Staples (2.82%), Financials (0.77%), Health Care (4.76%), Industrials (1.92%), Materials (1.94%), Real Estate (3.47%), Technology (3.84%), and Utilities (5.02%).
World markets also ticked up in July. The MSCI-EAFE Index trended higher by 1.60 percent%. Europe and France were under pressure, while Germany and the UK posted modest gains. Australia led the Pacific Rim markets with a gain of 1.09%. The big news, however, is the sharp drop in Hong Kong, where markets fell 9.94%. Chinese regulators continue to assert control over private companies, which includes data security, corporate behavior and financial stability.
July Market Report – Continuing the Winning Streak
GDP Outlook
The economy grew by an annualized rate of 6.5% in the second quarter. The growth rate, however, was well below economists’ expectations of 8.4%.
Employment Changes
Employers added 850,000 new jobs in June, marking the most significant increase since August 2020. However, the unemployment rate ticked higher to 5.9% due to a larger number of Americans seeking employment.
Retail Sales
Retail sales rose 0.6%, despite a two percent decline in auto sales. Sales were particularly strong at restaurants, bars, and clothing stores.
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Industrial Production
Industrial production increased 0.4%, though manufacturing output declined due to reduced automobile production.
Housing
Housing starts rose 6.3% in June, exceeding economists’ expectations. Sales of existing homes rose 1.4% after four consecutive months of declines. Inventories ticked higher, while demand softened a bit. New home sales slumped 6.6%, suggesting that high prices are cutting into demand.
Consumer Price Index – Inflation Outlook
Consumer prices jumped by 5.4% in June, registering the highest 12-month rate of change since August 2008. The core CPI, which excludes the more volatile food and energy sectors, increased by 4.5%.
Durable Goods Orders
New orders for durable goods rose 0.8% in June. This is the thirteenth month out of the last 14 in which durable goods orders registered a gain.
Keep a look out for our next market report in the Markets and Business section!
Resources
Conscious Capital Wealth Management, LLC Monthly Report, The Wall Street Journal, CNBC.com, Sectorspdr.com, MSCI.com, Bloomberg.com, FederalReserve.gov