Equities finished the week with some fanfare and scored all-time highs for the second week in a row. In all, markets finished with modest gains with the Dow Industrials higher by only 0.3% and the S&P 500 gaining 13 points or 0.5%. With help from the technology sector, the NASDAQ managed a nice 1.4% advance. Traders wrestled with earnings from some of the nation’s bellwethers including Intel, Goldman Sachs, VISA, General Electric and Microsoft. Some good, others – not so hot. On a sector-by-sector basis, the aforementioned technology stocks led the pack up 2.2% and healthcare and utilities were strong. Basic materials and energy, however, were weak with oil and gas companies falling about 1.4% on average. Oil continued to swoon hovering the mid-$40/bbl. range.
The July reading on U.S. Manufacturing (PMI) rose to nearly 53, above expectations and the highest in nine months. A surge in job creation, better-than-expected metrics in retail spending, industrial production and factory utilization, and with continuing evidence of stability on the housing construction front, should pave the way for further progress for stocks in the current quarter. Most of the Brexit fallout seems to have dissipated for now, but there still remains a lot of uncertainty and global economic and political turmoil continue to be wild cards.
Looking at the week ahead, the Federal Reserve will meet on Wednesday and the expectations are for a hold on interest rates for now. However, statements from the FOMC meeting on global developments will be watched carefully. On Friday, and advanced report on the second quarter’s GDP will be issued with pundits predicating a 2.6% annualized growth rate. In earnings news, Danaher will report second quarter results with forecasts of $1.22 per share vs. $1.08 a year ago. We will also hear from Kimberly-Clark ($1.48 vs. $1.41), Gilead Sciences ($3.02 compared to $3.15), 3M Co. ($2.07 vs. $2.02), Verizon ($0.92 vs. $1.04), Dow Chemical ($0.85 vs. $$0.91 last year) and Colgate-Palmolive, with estimates of $0.69/share vs. $0.70. Finally, United Parcel Service will report second quarter results on Friday with a Street consensus of $1.43 compared to $1.35. It is hard to fight the tape, as the old Wall Street adage goes. So, a fairly heavily-weighted equity position still seems to be appropriate.
Here is the answer to last week’s trivia question: The most profitable U.S. company is Apple with 2015 net profits of $53.4 billion. Which company comes in second? ExxonMobil, Walmart, Berkshire Hathaway or JPMorgan Chase. Answer: JPMorgan Chase with net profits for 2015 of $24.4 billion.
Today’s Trivia Question: Plummeting and negative interest rates overseas are helping to distort which popular gauge of the U.S. economy’s health? The yield curve; Fed-funds futures; Consumer Confidence Indicator; or the Consumer Price Index.