Investment Commentary – July 27, 2021
Year to Date Market Indices as of July 27, 2021
• Dow 35,058 (14.55%)
• S&P 4,401 (17.18%)
• NASDAQ 14,660 (13.75%)
• Gold $1,810 (-5.40%)
• OIL $71.93 (48.53%)
• Barclay Bond Aggregate (-1.46%)
• Fed Funds Rate 0-0.25 (0-0.25)
• Annual Inflation Rate 5.4% (As of 7/3/21)
S&P 500 ends volatile day slightly higher, Apple pushes Nasdaq to another record close
The S&P 500 erased earlier losses and rose slightly to a record on Monday as investors prepared for a busy week of earnings featuring reports from the largest tech companies.
The broad equity benchmark closed the volatile day 0.4% higher at a new record close of 3,855.36. The S&P 500 fell 1.2% at its low of the day. The tech-heavy Nasdaq Composite gained 0.7% to reach a fresh closing high of 13,635.99. The Dow Jones Industrial Average, less susceptible to changes in technology shares, dipped 36.98 points, or 0.1%, to 30,960.00. At its session low, the 30-stock benchmark dropped more than 400 points.
This coming week, 13 Dow components and 111 S&P 500 companies are set to report earnings. Among the quarterly reports on deck include those from Apple, Microsoft, Netflix, Tesla, McDonald’s, Honeywell, Caterpillar and Boeing.
Apple shares gained 2.8% to an all-time high before its quarterly report Wednesday after the bell. Tesla, which also reports Wednesday, popped 4% to hit a record.
“The Street is anticipating robust results from Apple on Wednesday after the bell with Cupertino expected to handily beat Street estimates across the board,” wrote Dan Ives of Wedbush, who raised his 12-month price target on Monday to $175. “While the Street is forecasting roughly 220 million iPhone units [for 2021], we believe based on the current trajectory and in a bull case Cupertino has potential to sell north of 240 million units.”
News Around The web:
Bouncing back: Strong quarterly earnings helped stocks rebound from the previous week’s modest declines, as the major U.S. indexes rose around 1% to 3%, with the NASDAQ outperforming the S&P 500 and the Dow. The results pushed stocks above the record levels that they set less than two weeks earlier, and the Dow topped 35,000 points for the first time.
Earnings surprises: As of Friday, 88% of the S&P 500 companies that had reported second-quarter results exceeded analysts’ earnings estimates, according to FactSet. That so-called beat rate ranks above the 75% five-year average, and it’s currently the highest rate since FactSet began tracking that data in 2008. Results were in from 24% of S&P 500 companies as of Friday.
Fed ahead: Despite concerns about inflation, the U.S. Federal Reserve is widely expected to keep its benchmark interest rate unchanged—and at a near-zero level—when it concludes a two-day meeting on Wednesday. Instead, Fed officials are expected to focus on beginning to wind down the central bank’s asset purchase program as the economy continues to recover from the pandemic.
GDP on tap: The U.S. government’s initial estimate of second-quarter GDP growth is scheduled to be released Thursday. Many economists expect the report will show that GDP growth accelerated from the first quarter’s 6.4% rate, although they see growth tapering off somewhat in the third quarter.
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.
https://www.marketwatch.com/ (Market Indices)
https://jasonzweig.com/this-day-in-financial-history/ (This day in Financial History)
https://www.jhinvestments.com/weekly-market-recap (Around the Web & Upcoming Events)
https://finviz.com/groups.ashx (YTD Performance Chart)