Markets took a step back last week to assess the strength of corporate balance sheets. Will short-term economic risks be absorbed or will last week be a warning signal?
Monday S&P 500 0.19% | NASDAQ 0.05%
A quiet day in economic data led to a flat trading day. Oil prices were on the rise as strikes were exchanged between the U.S. and Iran. This week will be full of corporate earnings from the 2nd quarter.
Tuesday S&P 500 0.89% | NASDAQ 1.29%
A resurgent tech rally won out as escalations abroad spiked commodities trading. The buying frenzy ahead of big-name earnings reflected a buy the dip strategy. Semiconductor stocks shone brightly ahead of Wednesday’s earnings announcements.
Wednesday S&P 500 0.14% | NASDAQ 0.57%
The tech rally simmered, oil rose, and the 10-year treasury yield climbed higher which has become a theme in Q3. Alphabet (GOOG, GOOGL) is set to release earnings after the bell, performing well up to the close. AT&T (T) rose on positive earnings beat, which will be a test for the beleaguered communication sector.
Thursday S&P 500 1.21% | NASDAQ 2.15%
Markets fell further after big capital expenditures on Artificial Intelligence, and layoffs in tech, were announced. Selling pressure mounted for the Communication sector as concern surrounding large investments in delayed revenue generating activity spooked investors. Earlier this week, the FedWatch CME Group forecasted an 80% chance of a rate increase in September.
Friday S&P 500 0.0.5% | NASDAQ 0.64%
News of Pakistan resuming diplomatic talks between the U.S. and Iran helped ease energy markets. New tariffs were levied by the U.S. on global trade partners as broad-based duties on imports went into effect. Since Q2, higher energy costs have raised prices so tariffs will be closely watched by both businesses and consumers.
Conclusion S&P 500 0.61% | NASDAQ 2.13%
This week was jam-packed with big economic and corporate developments. Earnings season is in full swing, new tariff policy was introduced, and military strikes abroad left markets shifting their attention. Right now, earnings season is buoying sentiment moving through Q3 while communication stocks and the broad indexes fell lower. As markets rotated into more of a defensive posture, the 10-year treasuries rose to their highest level in over 18 months. With increased uncertainty disrupting energy markets, there may be a squeeze in margins for Q3 if the conflict persists. On a positive note, the labor market has improved with those on unemployment falling to historic lows. Labor participation will be paramount to a strong 3rd and 4th quarter in revving the economic engine.
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