Investment Commentary – July 23, 2019

Year to Date Market Indices as of Market Close July 23, 2019
Dow27,349 (17.24%)
S&P 3,005 (19.89%)
NASDAQ 8,251 (24.36%)
Gold $1,417 (10.36%)
OIL $56.89 (24.19%)
Barclay Bond Aggregate (6.21%)
All World Index (15.76%)

Dow pops on renewed China trade talks, strong earnings

Plans by U.S. officials to travel to China for high-level trade talks lifted the Dow Jones Industrial Average which nearly set its fifth record high this year — as did strong-than-expected second-quarter results from Coca-Cola and United Technologies.

The major markets on Tuesday initially pared gains after U.S. home sales fell more than expected in June as a persistent shortage of properties pushed prices to a record high, suggesting the housing market was struggling to regain its footing since hitting a soft patch last year. The National Association of Realtors said existing home sales dropped 1.7 percent.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to China next week to meet and hold trade negotiations with Chinese officials, a senior government official told FOX Business.

Chinese Vice Premier Liu He and Chinese Commerce Minister Zhong Shan will attend the meetings, which are scheduled to be held in Shanghai – at the request of the Chinese delegation – and not Beijing, the official said.

Around the Web:

Early optimism: Earnings season got off to a solid start, with more than 80% of S&P 500 companies that had reported as of midweek exceeding analysts’ forecasts. Initial results from companies such as Microsoft fueled talk that second-quarter earnings could rise slightly from the same period a year ago rather than decline by around 3%, as had been forecast at the start of the reporting period.

Fed chatter: Comments from a U.S. Federal Reserve board member appeared to strengthen investor expectations that the Fed will cut interest rates at its next policy meeting on July 30-31. Stocks climbed on Thursday after New York Fed President John Williams said central banks must take swift action when faced with adverse economic conditions.

GDP ahead: The week’s most closely watched economic report is likely to be Friday’s initial estimate of second-quarter U.S. growth. In the wake of better-than-expected retail sales in June, analysts expect the report to show that GDP expanded at an annual rate of around 2.0%, down from the first quarter’s 3.1% figure.

Main Street momentum: Major banks’ second-quarter earnings got a much bigger lift from consumer operations than from lending to businesses. Consumer borrowing and spending boomed in an environment of low interest rates and low unemployment. Corporate clients were more cautious as a result of uncertainties about global economic growth.

Upcoming Events: Friday
Second-quarter GDP, initial estimate, U.S. Bureau of Economic Analysis

Other Notable Indices (YTD)
Russell 2000 (small caps) 15.41
EAFE International 13.71
Emerging Markets 9.12

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.