Earnings Season kicked off last week, highlighted by reports from some big banks. JPMorgan Chase, Wells Fargo, and Citigroupall posted better-than-expected earnings. However, their share prices pulled back as some of the internals in the reports were below estimates, along with some general profit taking in the group which has already runup quite a bit.
Economic data released last week had the Consumer Price Index in focus and in the spotlight. The CPI declined 0.1% in June (from the prior month) and registered an increase of 3.0% on a year-over-year basis. This data was softer (less inflationary) than forecast and was a primary factor behind the gains and rally in the stock market last week…..
The Dow Jones Industrial Average rose 1.6% to 40,001 (hitting a new record high intraday on Friday). The Standard & Poor’s 500 Indexgained .9% to 5,615, while the NASDAQ Composite, in a rare week of underperformance, rose 0.25% to 18,398. Of note last week, were small cap stocks, as the Russell 2000 advanced 6 percent to 2,148, reaching its highest level since 2022. The stock market rally has been broadening out, as opposed to the gains being concentrated in just a handful of mega cap technology stocks, as hopes have increased for an interest rate cut.
After the inflation numbers came in lower than consensus estimates, investors are now increasing their bets on a September interest rate cut by the Federal Reserve. The probability of a ¼ percent interest rate cut at the September meeting in now 94%, up from 78% a week ago, according to CME FedWatch. Looking to the week ahead….
The pace of earnings releases picks up this week. Companies scheduled to report include Goldman Sachs, BlackRock, UnitedHealth Group, Discover Financial, Johnson & Johnson, Bank of America, and American Express. In what will likely be the most watched report of the week, Netflix announces its results Thursday after the market close.
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