Investment Commentary –July 11th, 2017
Market Indices as of Market Close July, 11th, 2017
Dow 21,409 (8.33% YTD)
S&P 2,425 (8.35% YTD)
NASDAQ 6,193 (15.05% YTD)
Gold $1,215 (4.81%)
OIL $45.06 (-17.36%)
US 10Y Treasury 2.35 (-9.01%)
Barclay Bond Aggregate (2.05% YTD)
Wall Street ends near flat; politics drive stocks
U.S. stocks ended near flat on Tuesday in a day driven by political news, including concern over emails disclosed by President Donald Trump’s eldest son citing Russian support for his father’s election campaign.
Based on the latest available data, the Dow Jones Industrial Average .DJI rose 0.55 point, or 0 percent, to 21,409.07, the S&P 500 .SPX lost 1.9 points, or 0.08 percent, to 2,425.53 and the Nasdaq Composite .IXIC added 16.91 points, or 0.27 percent, to 6,193.31.
Goldman Sachs: Oil prices could plunge below $40
Goldman Sachs warned on Tuesday that crude oil could plunge below $40 a barrel “soon” if the massive U.S. oil glut persists and OPEC fails to take further action.
“The market is now out of patience,” Damien Courvalin, head of energy research at Goldman Sachs, wrote in a research report the oil market is notoriously hot and cold. Concerns about excess supply from U.S. shale producers sent crude into a bear market last month, posting a decline of more than 20%.
Oil prices then rebounded, rising for eight straight days. That was oil’s longest winning streak in more than seven years. Citigroup even argued a “bottom” in oil prices is “likely near.”
But Goldman Sachs doesn’t sound so sure that crude has stopped plunging. It warned that oil could sink below $40 a barrel due to the glut.
The problem is the same one that has gripped the market for the past three years: there’s more oil than the world needs right now. That’s why crude has plunged 16% this year to $45 a barrel on Tuesday.
Headlines around the Web:
The U.S. dollar gained against most foreign currencies for the week, reversing course from its sharp year-to-date decline. The first six months of 2017 marked the worst stretch for the dollar in six years, as its value fell 5.6% against a basket of other major currencies.
Stocks started the third quarter with solid gains on Monday and Friday but a sharp decline on Thursday. Overall, the major U.S. indexes rose slightly during a holiday-shortened trading week.
The U.S. economy generated 222,000 new jobs in June, exceeding economists’ expectations and marking an acceleration in employment growth. Through the first six months of 2017, the monthly average is 180,000 jobs, slightly behind the monthly average for all of 2016.
On Tap for the rest of the week:
Fed Chair Janet Yellen testifies before Congress, second day
Federal budget report, U.S. Department of the Treasury
Producer Price Index, U.S. Bureau of Labor Statistics
Retail sales, business inventories, U.S. Census Bureau
Consumer Price Index, U.S. Bureau of Labor Statistics
University of Michigan Index of Consumer Sentiment, preliminary result
Industrial production and capacity utilization, U.S. Federal Reserve
LEADERS & LAGGARDS
This past week’s leaders included Technology. Laggards included conglomerates, basic materials, healthcare and utilities.
THIS DAY IN FINANCAL HISTORY: July 11th, 1985
On this day in 1985, soda giant Coca-Cola unveils plans to put “Coca-Cola Classic” on the market. In actuality “Coca-Cola Classic” is the original soft drink that put the soda company on top. Earlier in the year the Coca-Cola Company decided to change recipes for their flagship beverage after a series of positive tests conducted for the new recipe. The tests did not effectively gauge how the public would accept the new “Coke” and after harsh reviews and declining sales Coke decided rather than admit defeat over their new soda they would remarket the original recipe by renaming it “Coca-Cola Classic.” The company did not completely forsake their new recipe though; they decided to sell it simply as “Coke.”
The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.