Sign in for Premium Content
If you are a client, sign in below to access premium content.
Stocks snapped their losing streak and regained steam last week despite some soft data, posting weekly and monthly gains. For the week, the S&P 500 gained 1.16%, the Dow rose 0.69%, and the NASDAQ grew 0.78%.1
July was a volatile month, with a tug-of-war between overseas and domestic data and concerns about a Greek exit from the Eurozone. Despite all the downward pressure, stocks managed to record a respectable gain for the week.
Earnings season continued, and we have results from over 350 S&P 500 companies. So far, overall earnings were down 2.5% year-over-year on 4.4% lower revenues. The Energy sector is dragging on overall earnings growth because of low oil prices. Taking Energy companies out, analysts expect overall S&P 500 earnings to be up 5.4% year-over-year on 1.4% higher revenues.2
Now that the overall earnings picture is firming up, analysts are turning their attention to third-quarter expectations. Unfortunately, it looks like U.S. companies are even more cautious about the rest of the year and earnings estimates for Q3 and Q4 are coming down across the board. The chart below shows that overall earnings growth is expected to be negative in the third and fourth quarters before picking up early next year.3
Source: Zacks Investment Research, Inc. (Data as of July 31, 2015)
Will these estimates hold? It’s hard to say. Many corporate managers prefer to “under-promise and over-deliver” on estimates, artificially lowering them so as to be able to beat their own expectations. We’ll know more as the quarter progresses.
The Federal Reserve met again in July, and though no interest rate changes were announced, the central bank reiterated its intentions to raise rates this year – possibly as soon as September.4 Are higher rates already baked into stock and bond prices? We don’t know for certain, but the Fed has been telegraphing its rates play for months now, so we hope that markets won’t overreact when rates finally start to go up. Though we don’t know how quickly the Fed will start hiking up rates, we expect the process to be slow and gradual, giving the economy time to adapt.
We also got our first look at second quarter Gross Domestic Product, which showed that the economy grew at 2.3% in the second quarter. While economists had predicted higher growth, it’s still a vast improvement on the 0.6% growth the economy saw in the wintery first quarter.5
The week ahead is packed with economic data, including motor vehicle sales, factory orders, and the July employment situation report. Analysts will be highlighting Friday’s July jobs report to see whether it supports or detracts from the Fed’s case for raising rates. If hiring remains strong and wage growth improves, the Fed may still be on target for a September rate hike. If wage growth is soft, it could push the timeline out.6
INVESTING RISK DISCLOSURE
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Mahoney Asset Management for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
IMPORTANT CONSUMER INFORMATION
This web site has been prepared solely for informational purposes. It is not an offer to buy or sell any security; nor is it a solicitation of an offer to buy or sell any security.This site and the opinions and information therein are based on sources which we believe to be dependable, but we can not guarantee the accuracy of such information.
Representatives of a broker-dealer or investment adviser may only conduct business in a state if the representatives and the broker-dealer or investment adviser they represent: (a) satisfy the qualification requirements of, and are approved to do business by, the state; or (b) are excluded or exempted from the state’s licenser requirements.
An investor may obtain information concerning a broker-dealer, an investment advisor, or a representative of a broker-dealer or an investment advisor, including their licenser status and disciplinary history, by contacting the investor’s state securities law administrator.
The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation. The actual effects of your financial decisions may vary significantly from these estimates–so these estimates should not be regarded as predictions, advice, or recommendations. Mahoney Asset Managment does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.
SECURITIES: ARE NOT FDIC-INSURED/ARE NOT BANK-GUARANTEED/MAY LOSE VALUE
This information is intended for use only by residents of CA, CT, DC, FL,, MA, MD, MN, NC, NJ, NY, OH, PA, and VA. Ken Mahoney may only conduct securities business with residents of the states and/or jurisdiction for which they are properly registered.
Securities offered through Newbridge Securities Corporation, member FINRA, SIPC.
Investment Advisory services through NFSG Corporation an SEC Registered Investment Advisor.
Office of Supervisory Jurisdiction: 1200 N. Federal Hwy., Ste. 400, Boca Raton, FL 33432. Phone 954.334.3450 Fax 954.489.2390
Specific recommendations can only be based on review of a number of suitability factors including but not limited to the investors financial profile, investment objectives, risk tolerance and the investors review of appropriate offering documents. Past performance is no guarantee of future results. To help you make informed decisions, we provide you with essential disclosures, such as Regulation Best Interest (Reg BI), the Client Relationship Summary (CRS), and Form ADV. Linked sites are strictly provided as a courtesy. Newbridge Securities, Inc. does not guarantee, approve nor endorse the information or products available at the sites, nor do links indicate any association with or endorsement of the linked sites by Newbridge Securities.
