This past trading week on Wall Street saw tech stocks leading the way, with the Dow Jones Industrial Average gaining nearly 1%. The S & P 500 and Nasdaq closed at record highs, with a rise of almost 2% and 3.5%, respectively. This trend of strength in the market has been consistent since June and has carried over from the second quarter and the first half of 2024. The strong performance of the S & P 500 technology sector was a highlight, with top Club stocks like Apple and Broadcom standing out. Consumer discretionary and communication services, featuring companies like Meta Platforms and Alphabet, also showed strength.
Despite the overall positive performance of the market, energy stocks led to the downside during the week, followed by health care and industrials. Notable updates on the economy, such as the quarterly results from Club holding Constellation Brands, also impacted the market. While the Corona and Modelo brewer’s results were decent, there are concerns about the troubled wine and spirits business that management needs to address in the coming quarters. This led to some selling pressure on the stock, although it recovered by the end of the week.
The week also saw updates on key economic indicators that are closely watched by the market. The government’s monthly jobs report indicated an uptick in June’s unemployment rate to 4.1%, with nonfarm payrolls additions slightly higher than expected at 206,000. Wage inflation was in line with expectations, supporting the case for the Federal Reserve to cut interest rates at its September meeting. This data, along with updates on the manufacturing sector, has led economists to believe that the Fed will start cutting rates soon.
As the market prepares for earnings season, investors are watching key indicators like net interest income (NII) guidance from financial institutions like Wells Fargo. The outlook for NII to be down 7% to 9% year over year may be conservative, given the Fed’s policy and other factors. Investors are also keeping an eye on other bank names like Morgan Stanley, which passed the stress test and has strong capital positions. Management’s thoughts on share repurchases and the state of consumer savings will be important factors to watch during earnings reports.
Looking ahead, the week will bring key economic events like the release of the consumer price index (CPI) and producer price index (PPI) data. CPI is closely watched as it represents what consumers are paying for goods, while PPI informs us of cost input levels for corporations. Economists are expecting slight increases in both CPI and PPI data, which could impact market expectations. Other major events to watch include earnings reports from companies like PepsiCo, Delta Air Lines, and Conagra Brands, before the focus shifts to major financial institutions like Wells Fargo, JPMorgan Chase, and Citigroup.
Wall Street’s performance and economic data from the past week have shown positive trends in tech stocks and overall market strength. Despite concerns in certain sectors and economic indicators, investors are optimistic about the upcoming earnings season and key economic events. The market will continue to closely monitor developments in inflation, interest rates, and corporate earnings, which will shape investor sentiment in the coming weeks.