Markets were not in a risk-on mood last week. Will growth projections for Q3 increase earnings awareness?
Monday S&P 500 0.79% | NASDAQ 1.55%
Sentiment prompted markets to sell off early in the day after escalations in the Middle East. Brent Crude and West Texas Intermediated spiked after the peace deal fell apart. Corporate earnings season comes later this week, which will provide a finger on the pulse of revenue of Q2.
Tuesday S&P 500 0.38% | NASDAQ 0.90%
A big economic data point was released on Tuesday for June Consumer Price Index (CPI) figures. The gauge that measures monthly (and yearly) price increases fell after sharp increases in April and May. This could be less of a headwind for earnings projections and impact the decision behind Federal Reserve interest rate policy.
Wednesday S&P 500 0.38% | NASDAQ 0.62%
Following yesterday’s CPI release, Wednesday’s Producer Price Index (PPI) reinforced a cooling price environment. Investment firms Morgan Stanley (MS) and Blackrock (BLK) both reported strong quarterly earnings after the Q2 run-up. The 10-year treasury lowered on news of stabilizing economic conditions, weakening the US Dollar.
Thursday S&P 500 0.51% | NASDAQ 1.47%
More pressure on semiconductor companies and rising energy prices on Thursday. Reports of slowing demand for chips and continuing military activity in Iran contributed to negative sentiment on the day. Core Retail Sales (June), which excludes higher priced items like Automobiles, fell after 4 consecutive months of expansion.
Friday S&P 500 1.01% | NASDAQ 1.40%
The risk-off trade was the tale of the red tape as cautious sentiment won out on Friday. Netflix (NFLX) weighed heavy on the Communication Services Sector after poor guidance was issued. Markets were unwilling to go into the weekend with long equity position particularly in the technology space.
Conclusion S&P 500 1.55% | NASDAQ 2.90%
Earnings season kicked off last week and markets took note of key infrastructure concerns in technology and slowing growth prospects. Energy soared as the leading sector following threats of a temporary disruption in oil supply, yet again. Financial companies, including investment firms and banks, reported healthy earnings in a hawkish rate environment. This week’s price declines, as reflected by the CPI and PPI, helped lowers expectations of a September rate hike. It is not atypical that the first couple of days of earnings season can contribute to profit-pulling activity. The question is more whether profits are showing signs of cracking in recent high-flying areas of the market.
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