Last Week’s Summary
- S&P 500 Index rose 0.7%
- International Equities fell -0.64%
- Emerging Markets fell -1.31%
- U.S. 10-Year Treasury Yield was unchanged at 3.83%
- Initial Jobless Claims fell to 228k
- Retail Sales rose 0.2%, below estimates
What to Watch for This Week
- M, 7/24/23 S&P US Manufacturing PMI
- T, 7/25/23 Consumer Confidence
- W, 7/26/23 FOMC Rate Decision
- Th, 7/27/23 GDP Annualized QoQ, Durable Goods Orders, Initial Jobless Claims
- F, 7/28/23 Personal Income & Spending, U. Michigan Sentiment
Weekly Market Recap
U.S. stocks saw gains with the S&P 500 Index rising by 0.7%. The focus remains on whether the recent surge in a few mega-cap stocks and the excitement surrounding artificial intelligence will continue to drive the market. Surprisingly, the S&P 500 has already exceeded most year-end estimates, defying the expectations of strategists who predicted a challenging year for the markets due to a potential recession in 2023.
However, the situation has been balanced by evidence of slowing inflation and an improving economic outlook, leading traders to scale back their predictions on how much the U.S. overnight benchmark rate will increase. Policymakers’ quarterly forecasts suggest a median expectation of two more quarter-point rate increases this year to align inflation with the Fed’s target.
Although U.S. industrial production and retail sales missed estimates, there is a more positive outlook regarding household spending, indicating a more resilient consumer. On the housing front, new home construction declined in June after a surge the previous month, and applications for future construction slipped, according to Wednesday’s data.
Surprisingly, U.S. jobless claims dropped unexpectedly. This development boosted the dollar and yields on 10-Year Treasuries. In the coming weeks, the focus for the U.S. markets will shift to corporate earnings, with hundreds of companies scheduled to report their performance.
