Market Update: Wednesday, July 26, 2017


Yesterday’s Market Activity

  • S&P 500 +0.3%, Dow +0.5% on mostly well-received earnings news, though technology weakness kept the Nasdaq (unchanged) from matching the broader index.
  • Solid day for small caps with Russell 2000 Index +0.9%.
  • Earnings helped overall tone, but mixed results weighed on healthcare, industrials.
  • Treasury yields +8 basis points (+0.08%) to 2.33%, yield curve steepened, driving financials (+1.3%) higher. Energy (+1.3%) stocks boosted by a more than 3% rally in crude ($47.89/bbl.) after Saudi announced export reductions.
  • Consumer confidence for July rose to 121.1 from prior month’s revised 117.3, with improvement in current conditions, short-term outlook.

Overnight & This Morning

  • Stocks up slightly (S&P 500 +0.2%), helped by gains in Europe, earnings results ahead of FOMC announcement that is unlikely to bring material new news. Impact of latest healthcare developments unclear.
  • Key European markets ~0.5% higher, buoyed by strong German business sentiment data. Latest gains in euro being digested well it seems.
  • Asian markets rallied overnight, following U.S. gains, with Hang Seng, Nikkei higher.
  • Treasuries firm following yesterday’s yield backup. 10-year yield 2.32%.
  • WTI crude oil ~1% higher ($48.19/bbl.) after biggest one-day rally of 2017 on Saudi cuts and inventory draws.
  • Healthcare effort continues. Senate Republicans able to round up 50 votes to move forward with a debate on healthcare reform, with Vice President Mike Pence breaking a 50-50 tie. Senate now expected to vote on series of replacement (or straight repeal) options over the course of the week. Long odds of passage remain, but possible.
  • FOMC announcement coming today, along with new home sales data and government crude oil inventory data.



Key Insights

  • Low expectations for Fed meeting. The policy arm of the Federal Reserve (Fed), the Federal Open Market Committee (FOMC), will end their two-day meeting with a prepared statement at 2 p.m. today. Markets are pricing in very low odds of a rate hike, but investors will be closely watching the language of the Fed statement for any hint on the start of balance sheet normalization and the future path of rate hikes. We will post our thoughts on the statement this afternoon on the LPL Research blog.
  • Small cap opportunity? A near-term opportunity in small cap stocks may be developing should U.S. dollar weakness reverse and sentiment on Washington, D.C. policy prospects begin to improve, which we believe is likely over the coming months. We understand the near-term opportunity for pure stock market beta may not be particularly enticing, so it is increasingly important to look for alpha opportunities. We think small caps may be a timely idea.


Click Here for our detailed Weekly Economic Calendar


  • New Home Sales (Jun)
  • FOMC Rate Decision
  • UK: GDP (Q2)
  • South Korea: GDP (Q2)



  • GDP (Q2)
  • Core PCE (Q2)
  • France: GDP (Q2)
  • France: CPI (Jul)
  • Germany: CPI (Jul)
  • UK: Nationwide House Prices (Jul)
  • Eurozone: Consumer Confience (Jul)
  • Canada: GDP (May)


Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Stock investing involves risk including loss of principal.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

The prices of small cap stocks are generally more volatile than large cap stocks.

Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.

Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor

Tracking # 1-628837