July 17, 2021 Weekly Market Update. The U.S. equity markets retrenched for the week on investor worries over the potential flattening of the yield curve (slowing economy sign), consumer confident dipping to 80.8 (from 85.5 in June), inflation concerns (CPI rose a whopping 5.4), and Biden’s proposed higher tax changes: For the week, the Dow Jones Industrial Average slipped -0.52% followed by the S&P 500 Index -0.97% and the Nasdaq -1.87%. Further, the Delta coronavirus variant appears to be taking hold with U.S. case counts rising 87% week-over-week. In contrast to these ailments, 90% of S&P 500 companies have beat revenue estimates for Q2 to date, with 85% beating EPS estimates to date (Source: Factset).
July 10, 2021 Weekly Market Update. Though a bumpy ride, the major U.S. equity indexes finished up for the week: the Nasdaq +0.43%, the S&P 500 Index +0.40% and the Dow Jones Industrial Average +0.24%. Market volatility was spurred by the 10-year Treasury dipping to 1.25% from a high of 1.75% back in March. The drop in yields is often an indicator of economic slowdown, and while economic data may have peaked globally with Delta version of the coronavirus shutting down travel in many regions of the world again, there isn’t any hard evidence the U.S. economy is slowing at this stage. Case in point, the bottom-up EPS estimate for the S&P 500 for Q2 increased by +7.3% from March 31 to June 30, which was the largest increase during a quarter since FactSet began tracking this metric in 2002. Further, according to Factset, industry analysts in aggregate predict the S&P 500 will see a price increase of 11.2% over the next twelve months.
July 5, 2021 Weekly Market Update. Strong employment trends continue to take center stage with unemployment dropping to 5.9%; nonfarm payrolls jumped 850k in June, a 150K higher figure than expectations. For the week, the Nasdaq (1.94%) led the major indices followed by the S&P 500 (1.67%) and the Dow Jones Industrial Average (1.02%). U.S. consumer confidence index rose 7.3 points to a 16-month high of 127.3 in May marking a 13-month high while pending home sales rebounded 8.0% to 114.7 in May.