Yesterday’s Market Activity
- Stocks up despite lackluster economic data; bounce-back from early lows. S&P 500 Index +0.2%, Dow +0.3% (another record high, 5th in a row), Nasdaq +0.2%.
- Sectors broadly higher, though weakness in healthcare (-0.2%), industrials (-0.2%) offset rise in financials (+0.8%), tech (+0.5%).
- Economic data mostly disappointing as ISM manufacturing (56.3), personal income (flat) and spending (+0.1%), construction spending (-1.3%) missed expectations. Core PCE Price Index (+0.1%) was in-line.
- Auto sales (16.5mm) bested last month’s tally, though estimates were for 16.7mm. All major auto makers contributed to shortfall.
- Oil snapped six-day winning streak; off 2% to $49.19/bbl. Weakness stemmed from a Bloomberg survey showing rise in OPEC output in July, and an American Petroleum Institute report showing gain in U.S. inventories.
- COMEX Gold up modestly at $1275/oz., industrial metals fell, U.S. dollar +0.2% vs. major currencies, 10-year Treasury yield down 5 basis points (0.05%) to 2.25%.
Overnight & This Morning
- U.S. equities higher in early trading, boosted in part by a well-received earnings report from Apple.
- Europe is broadly lower, driven by earnings and oil prices; STOXX Europe 600 -0.2%.
- In Asia, major indexes closed mixed. Shanghai Composite (-0.2%), Hang Seng (+0.2%), Nikkei (+0.5%).
- Commodities – WTI crude oil (+0.1%) at $49.25/bbl, gold ($1271/oz.) lower by 0.7%, copper -0.1%.
- 10-year Treasury yield 2.25%, dollar index unchanged.
- Economic data takes a breather today, with ADP employment the only major report, which beat expectations slightly at +178k jobs (vs. 173k consensus and 158k previous). This number is in line with expectations for the official employment report, which will be released on Friday (180k growth in non-farm payrolls expected).
- Sector winners in August? As we discussed earlier this week, August tends be a weak month seasonally. However, one way to reduce the negative effects of potential equity headwinds in August is by identifying sectors and industries that have the potential to outperform. We take look at which areas have historically performed better, today on the LPL Research blog.
- Markit Services PMI (Jul)
- ISM Non-Mfg. (Jul)
- Durable Goods Orders (Jun)
- Capital Goods Shipments & Orders (Jun)
- Germany: Retail Sales (Jun)
- Italy: Markit Services PMI (Jul)
- France: Markit Services PMI (Jul)
- Germany: Markit Services PMI (Jul)
- Eurozone: Markit Services PMI (Jul)
- UK: Markit Services PMI (Jul)
- Eurozone: Retail Sales (Jun)
- Change in Nonfarm, Private & Mfg. Payrolls (Jul)
- Unemployment Rate (Jul)
- Average Hourly Earnings (Jul)
- Labor Force Participation & Underemployment Rates (Jul)
- Trade Balance (Jun)
- Germany: Factory Orders (Jun)
- Italy: Retail Sales (Jun)
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.
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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.
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