THE WEEK ON WALL STREET
Last week, investors assessed earnings and the initial estimate of second-quarter economic growth, while awaiting the Federal Reserve’s next announcement about interest rates. Stocks rose for the week; particularly, tech shares. The S&P 500 gained 1.65%; the Nasdaq Composite, 2.26%. The Dow Jones Industrial Average lagged, adding just 0.14%. MSCI’s EAFE index, a gauge of equity performance in developed foreign markets, ticked up 0.01%.
ECONOMY GREW MODERATELY IN Q2
Analysts surveyed by Dow Jones Newswires had forecast 2.0% GDP for the second quarter. The actual estimate, announced Friday by the Bureau of Economic Analysis, was slightly better at 2.1%. While this is the poorest quarterly GDP number since the opening quarter of 2017, the decline in GDP largely reflects a decrease in business investment. Consumer spending improved 4.3% in Q2, and government spending rose 5.0%, which was the biggest quarterly gain in a decade.
CHINA TRADE TALKS TO RESTART
U.S. trade delegates are scheduled to resume face-to-face negotiations with their Chinese counterparts, starting Tuesday in Shanghai. This renewed effort to forge a bilateral trade pact could go on for some time. Secretary of the Treasury Steven Mnuchin, who is part of the U.S. delegation, told reporters last week that it would likely take “a few more meetings” before any kind of accord can be considered, while National Economic Council Director Larry Kudlow said he does not expect “a grand deal” to come to fruition this week.
WHAT’S NEXT
Wednesday at about 2:00pm EST, the Federal Reserve is scheduled to conclude its July meeting. Wall Street is eager to see what the Fed will do with interest rates. The question is whether traders have priced in expectations of a cut and how they may react if no cut comes.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: The federal government’s June personal spending report and the Conference Board’s monthly index of consumer confidence.
Wednesday: The Federal Reserve presents its latest statement on interest rates and monetary policy, and payroll titan ADP offers its July private-sector employment snapshot.
Thursday: The latest report on American manufacturing from the Institute for Supply Management.
Friday: July jobs data from the Department of Labor and the University of Michigan’s final July Consumer Sentiment Index, measuring household confidence in the economy.
THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS
Monday: RingCentral (RNG)
Tuesday: Apple (APPL), Mastercard (MA), Merck (MRK), Pfizer (PFE), Procter & Gamble (PG)
Wednesday: General Electric (GE), Qualcomm (QCOM)
Thursday: Royal Dutch Shell (RDS.A), Verizon (VZ)
Friday: Berkshire Hathaway (BRK.B), Chevron (CVX), ExxonMobil (XOM), Toyota (TM)
FINAL THOUGHTS
Alan Greenspan once said: "If I turn out to be particularly clear, you've probably misunderstood what I've said." My oh my how times have changed. These days the Fed seems to announce what they’re going to formally announce before each and every move they make. If that’s not enough, they host a press conference to take questions to make sure they have been clear.
This week's economic calendar will be dominated by the Fed's decision on rates. Despite the better-than-expected GDP data, the Street is still expecting the Fed to cut rates a quarter point on Wednesday for the first decrease in over a decade. In addition to the Fed meeting, Friday's jobs report will be closely watched as we start to contemplate the Fed's next move. Refinitiv is predicting a strong number with an estimate of 170,000 new jobs with unemployment at only 3.7%.
Stay tuned and have a great week! Nick Toadvine These are the views of FMG Marketing Library, and not necessarily those of Nick Toadvine, or Calton Associates, Inc., and should not be construed as investment advice. Neither Nick Toadvine nor Calton & Associates, Inc. gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. |
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July 29, 2019