THIS WEEK'S UPDATE

THE WEEK ON WALL STREET

Stocks rallied last week as investor spirits lifted thanks to a better-than-expected start to the

second-quarter earnings season. The Dow Jones Industrial Average gained 1.95%, while the

Standard & Poor’s 500 added 2.55%. The Nasdaq Composite index jumped 3.33% for the week.

The MSCI EAFE index, which tracks developed overseas stock markets, advanced 3.54%.
 

EARNINGS PROPEL STOCKS

Earnings season kicked off last week, with major banks reporting second-quarter results. While

their results were mixed, they appeared to indicate that consumers and businesses remained

reasonably healthy–a perspective that helped erase some negative sentiment overhanging the market.   

As the week progressed, stocks gained momentum as earnings results poured in from different sectors

of the economy, showing that businesses were navigating higher inflation and slowing growth better

than investors feared. Technology and other gloomier sectors were among the market’s best performers

for the week. A few disappointing corporate reports and a weak economic report sent stocks lower to

close out a solid week.  
 

CRACKS IN THE FOUNDATION 

Data released last week indicated slowing in the housing market. The latest monthly homebuilder

sentiment survey showed the single largest monthly drop in its 37-year history, except for April 2020.

The sentiment report preceded a drop in June housing starts and issued building permits. Housing starts

declined for the second month, falling 2.0% and surprising economists who had expected an increase.

Housing weakness made itself known through a 5.4% month-over-month decline in June's existing home

sales, representing the slowest pace since June 2020. Increasing prices and higher mortgage rates

demonstrated drags on buyer demand. 
 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: New Home Sales.

Wednesday: FOMC Announcement. Durable Goods Orders. 

Thursday: Gross Domestic Product (GDP). Jobless Claims.
 

THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS

Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Visa, Inc. (V), Alphabet, Inc.

(GOOGL), General Motors Company (GM), The Coca Cola Company (KO), McDonald’s Corporation (MCD),

Archer Daniels Midland Company (ADM), 3M Company (MMM), Texas Instruments, Inc. (TXN),

United Parcel Service, Inc. (UPS), KimberlyClark Corporation (KMB).

Wednesday: The Boeing Company (BA), Ford Motor Company (F), Qualcomm, Inc. (QCOM), Bristol Myers

Squibb Company (BMY), Lam Research Corporation (LRCX), Shopify, Inc. (SHOP), ServiceNow, Inc. (NOW),

General Dynamics Corporation (GD), Norfolk Southern Corporation (NSC).

Thursday: Apple, Inc. (AAPL), Intel Corporation (INTC), Mastercard, Inc. (MA), Pfizer, Inc. (PFE),

Merck & Co., Inc. (MRK), The Southern Company (SO), Northrop Grumman Corporation (NOC),

Southwest Airlines (LUV). 

Friday: AbbVie, Inc. (ABBV), Exxon Mobil Corporation (XOM), Chevron Corporation (CVX),

The Procter & Gamble Company (PG), ColgatePalmolive Company (CL).
 

FINAL THOUGHTS

There are 174 companies of the S&P 500 reporting earnings this week.  The Fed will raise interest rates on

Wednesday and their commentary afterwards is likely to move markets.  We expect a 75 basis point increase.  

We also get the 2^ndquarter GDP on Friday.  So, as you can see there is a lot of fundamental data coming out this

week. 
 

So far, 102 companies in the S&P 500 have reported earnings (about 20% of the S&P 500) and overall earnings 

results are beating estimates by a median of 7%.  And 72% of those reporting are beating estimates.  On the top line,

overall results are beating estimates by a median of 1%. And 65% of those reporting are beating estimates.  We will

learn a lot more about the economy and markets by week’s end.  The base case if earnings hold is for some type of

rally into year's end.

Stay tuned…