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Market news
Stocks bolted ahead last week as investors cheered the last big week of Q2 corporate reports and a Friday jobs update that put the spotlight on the Fed’s next move with short-term rates.
The Standard & Poor’s 500 Index advanced 3.57 percent, while the Nasdaq Composite Index gained 5.19 percent. The Dow Jones Industrial Average rose 2.96 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 2.32 percent.¹˒²
Tech Stocks Steal the Spotlight
Stocks opened the week strong as oil prices slid on news of diplomatic efforts in the Middle East. Big Tech led, which helped push the Dow Industrials to a record close.³
Investor optimism continued to build on Tuesday as stocks opened higher and climbed throughout the day. Strong Q2 corporate reports added fuel to the rally, lifting all three averages into a second day of robust gains.⁴
Markets opened higher on Wednesday but lost momentum as the day progressed. On Thursday, oil prices crept higher, and stocks went sideways as investors awaited updates on the Middle East and digested the final big trove of Q2 corporate results.⁵˒⁶
Then, on Friday, an unexpected contraction in the labor market boosted stocks as investors hoped the jobs data might influence the Fed’s outlook for short-term rates.
Each major average logged its best weekly gain since mid-April.⁷
Labor Market Update: Not What Was Expected
The economy unexpectedly shed 23,000 jobs in July, based on the Labor Department’s report released Friday. Economists expected 83,000 jobs to be created. July’s decline was the first monthly contraction in the labor market since February.⁸
Additionally, the number of jobs added in May and June was revised down by 103,000, reinforcing evidence of a cooling job market. Meanwhile, unemployment edged down to 4.1 percent as fewer people looked for work.
Connor's Insights
The Market Still Lacks That “Oomph”
Connor Mahoney
Investment Advisor Representative
The market has not signaled a full-fledged “risk-on” environment, as the S&P 500 continues to outperform the Nasdaq, as seen in the Nasdaq/S&P ratio chart.
This shows that enthusiasm for higher-beta growth stocks is not there and suggests investors aren’t aggressively moving out on the risk curve—at least not yet.
The S&P 500 has more defensive sectors within its composition, such as healthcare, consumer staples, banks, energy, and industrials.
The arrows in the image point to the multi-month periods when the market was “easier” and saw significant upside, with stocks moving higher in sync. At the moment, there is some bifurcation in the movement of different stock sectors.
So, that is where the market still lacks that oomph. We are still lacking major follow-through in technology and its adjacent stocks, which are usually the ones that lead the move higher, as well as the speculative appetite you’d expect from a truly powerful risk-on move.
Coogle's Corner
Only 10–20% of the Year Is Easy
Bill Coogle
Vice President
The easy periods when you can “throw a dart” really only come 10–20 percent of the year. The rest of the time, you have to be on the ball, manage risk, accept some stop-outs, and keep your eyes peeled for good opportunities.
Wall St. Tip
It’s All About Earnings
More than anything, earnings are what are holding this market up broadly. Earnings per share landed around 275 last year. Estimates were for 280–300 in earnings per share in January, and now we are in the range of 310–340 per share.
So, when companies are reporting good earnings, there are positives for those stocks and the indexes, as companies are able to buy back stock, raise dividends, and raise their guidance.
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