Investment Commentary – July 23, 2014
Dow – 17,113.54 (7/22/14 close)
S&P 500 – 1,983.53 (7/22/14 close)
10-year Treasury – 2.47% (7/22/14 close)
- Currently geopolitics is the biggest single threat to the market analysts say. North American oil production has relieved a lot of the stress from any disruption going on in the Middle East. Analysts believe oil prices would be a lot higher if it were not for the oil production growth going on in the U.S. and Canada.
- Analysts think there are 2 things that are helping the stock market remain steady and continue to rise. The first is that the U.S. economy right now is continuing its recovery. The other thing is, that even though we are hitting new highs and the market has done well, particularly last year, there’s still good value.
- U.S. earnings growth has been strong, despite continued slow growth. Quarterly sales growth for the S&P 500 index is tracking at nearly 4%, while earnings are at record highs, having grown nearly 10% in the quarter thus far.
- Both the U.S. and China have had favorable economic data easing investor fears.
- U.S. corporations are flush with cash and poised for capital expenditures that analysts believe could be the catalyst for the next stage of growth.
- The labor market is continuing to improve and has experienced 5 straight months of over 200k new jobs – a streak not seen since 1999. There are more job openings now than at any point since the credit crisis. The unemployment rate at 6.1% has blown through the initial Fed bogey of 6.5% to start tightening interest rates.
- Strong manufacturing data is an early indicator that the economy is expanding. Meanwhile, the American consumer is feeling more confident; the wealth effect of strong investment portfolio returns and higher home values should encourage future spending.
- Analysts would continue to emphasize large caps, particularly in energy and technology, as well as taking a look at emerging markets.
- Analysts continue to like high yield bonds especially with an improving economy.