Short On Time… Executive Summary
The Trump-Putin summit was a nothing burger other than being good for a few memes. He meets with Zelensky today. My guess is more memes and nothing else, but this isn’t a political update.
As of the latest earnings season, 458 companies, representing 92% of the S&P 500, have reported their results. A strong 83% of these companies have surpassed earnings estimates, with a median beat of 6%, while the 17% that missed estimates did so by a median of -4%. On the revenue front, 79% of reporting companies exceeded top-line expectations, with a median beat of 5%, whereas those missing revenue estimates fell short by a median of -5%. These figures highlight a generally robust performance across the S&P 500, with a significant majority of companies outperforming analyst expectations on both earnings and revenue.
Powell speaks from Jackson Hole on Friday. This will probably move the market as everyone’s focus is on rate cuts.
The Week On Wall Street
Stocks rose last week despite mixed signals on inflation as investors kept one eye on the Fed’s September meeting. The Standard & Poor’s 500 Index advanced 0.94 percent, while the Nasdaq Composite Index added 0.81 percent. The Dow Jones Industrial Average rose 1.74 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 2.16 percent.
Third Gain in Four Weeks
Stocks posted modest losses to start the week as investors braced for July consumer inflation reports. The White House’s executive order on Monday extending the tariff deadline for China by 90 days failed to move markets in the other direction. Stocks then staged a two-day rally following the latest Consumer Price Index (CPI) report, which showed July inflation held steady over the prior month—beating expectations. The inflation news led some investors to move into small-cap stocks, with the Russell 2000 Index of small-cap stocks rising 5 percent over Tuesday and Wednesday. However, markets slipped Thursday as investors dug into the Producer Price Index (PPI) for July, which showed wholesale inflation hit a 3-year high last month; this was the third weekly gain in the past four weeks for each of the three major averages; the S&P and Nasdaq advanced four of the last five weeks.
A Mixed Inflation Story
Inflation continues to give mixed signals, which can unsettle investors who anticipate the Fed adjusting rates at its September meeting. Last week’s CPI report showed that “headline” (retail) inflation held steady. Stocks rose in response, even though core inflation—excluding volatile food and energy prices—was hotter than economists expected. Two days later, the PPI report revealed that inflation began to creep into wholesale prices in July. Stocks fell in response as investors processed the conflicting reports.
This Week: Key Economic Data
Monday: Homebuilder Confidence Index.
Tuesday: Housing Starts. Building Permits. Federal Reserve Official Michelle Bowman speaks.
Wednesday: Minutes from Fed’s FOMC July Meeting. Federal Reserve Official Christopher Waller and Atlanta Fed President Raphael Bostic speak.
Thursday: Weekly Jobless Claims. Services & Manufacturing PMI Composite. Existing Home Sales. Leading Economic Indicators. 30-Year TIPS (Treasury Inflation-Protected Securities) Auction. Fed Balance Sheet. Atlanta Fed President Raphael Bostic speaks.
Friday: Fed Chair Jerome Powell speaks.
This Week: Companies Reporting Earnings
Monday: Palo Alto Networks, Inc. (PANW)
Tuesday: The Home Depot, Inc. (HD)
Wednesday: The TJX Companies, Inc. (TJX), Lowe’s Companies, Inc. (LOW), Analog Devices, Inc. (ADI)
Thursday: Walmart Inc. (WMT), Intuit Inc. (INTU)
Stay tuned...
