Retail Sales Came In Solidly Above Expectations | Daily Market Update

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Friday, July 16, 2021

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Retail sales came in solidly above expectations

  • Retail sales for June increased 0.6% month over month, ahead of Bloomberg’s consensus forecast for a 0.3% decline and following a 1.7% decline in May.
  • Excluding autos and gasoline, sales rose an even stronger 1.1%, above expectations for a 0.5% increase.
  • Increases were broad based with monthly increases in 9 of 13 categories.
  • Sales growth was strong in department stores, clothing, and restaurants, consistent with the reopening, while electronics sales rebounded solidly after May weakness.
  • In addition to the reopening, excess consumer savings, positive wealth effects, and an improving job market should support solid consumer spending increases in the second half.

Daily Insights

US markets up slightly in early trading after finishing mostly lower on Thursday

  • Today market participants will digest more earnings results, retail sales data for June, and continue to assess inflation prospects and the Federal Reserve’s (Fed)
  • European markets are marginally lower through midday trading as Eurozone preliminary Consumer Price Index (CPI) reading meet estimates.
  • Asian equities finished their session mixed as Japan (Nikkei) ended its session lower.
  • However, the small cap Russell 2000 Index has fallen 3.9% through last Thursday’s close and is nearing important support near 2100.

Checking In On Inflation

  • This week brought a batch of new inflation data for investors to consider, including June reports for the CPI and the Producer Price Index (PPI) as well as Fed Chair Powell’s two-day testimony to Congress.
  • We evaluate these new inputs as well as their implications for the inflation outlook in today’s LPL Research blog.

Technical update

  • Another mixed day for U.S. equities yesterday, however this time value outperformed growth by more than 50 basis points (0.5%).
  • The S&P 500 Index has traded in just a 1.2% range this week and in early trading is tracking towards no change for the week.
  • However, the Russell 2000 has fallen 3.9% through Thursday’s close and is nearing important support near 2100.
  • We believe small caps will respond positively to support, however a break below 2100 for the Russell 2000 may signal the start of a broader pullback in equities.

Midyear Outlook 2021 has launched. While the speed can be exhilarating as economic growth accelerates, it can also be dangerous. Midyear Outlook 2021: Picking Up Speed is designed to help you navigate the risks and opportunities brought upon by the economy’s reopening for the rest of 2021 and beyond. For more information, please read our Midyear Outlook 2021.

Street View Midyear Outlook 2021

In the latest LPL Street View video, LPL Financial Chief Market Strategist Ryan Detrick takes a closer look at what the LPL Research team thinks is coming in the second half of 2021, with a special focus on the economy, policy, stocks, and bonds.

Three Things to Watch This Earnings Season

LPL Research anticipates a strong earnings season and outlines the three things investors should keep on their radars this quarter. Learn more in this week’s Weekly Market Commentary.

Midyear Outlook 2021 Is Here: What Does LPL Research Think Is On the Horizon?

In this week’s LPL Market Signals podcast, LPL Research’s Chief Market Strategist, Ryan Detrick and Equity Strategist, Jeff Buchbinder discuss how to navigate the risks and opportunities brought upon by the economy’s reopening for the rest of 2021 and beyond.

 

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