Market Indexes:
It was a down week for the market, with stimulus hopes battling surging Coronavirus cases and reversals of state re-openings in the US, in addition to heightened US-China tensions. All 4 indexes lost ground, with the Tech-heavy NASDAQ lagging.
Earnings:
Coca-Cola (NYSE:KO) Co rose 2.2% pre-market Tuesday as it said demand for its sodas were improving after the “most challenging” quarter for the year.
IBM (NYSE:IBM) jumped 5.3% Tuesday after it signaled higher demand in its cloud computing business, as large corporations accelerate their digital shift.
Of the 75 S&P 500 companies that have reported quarterly results, 77% of them have beaten dramatically lowered profit estimates.
Volatility:
The VIX rose slightly, up .06% this week, ending at $25.84, vs. $25.68 last week.
High Dividend Stocks:
These high yield stocks go ex-dividend next week: AGNC, EFC, EPD, PAA, PAGP, .
Market Breadth:
16 out of 30 DOW stocks rose this week, vs. 26 last week. 55% of the S&P 500 rose, vs. 84% last week.
FOREX:
The USD fell vs. most major currencies this week.
“The dollar dropped to its lowest in nearly two years on Thursday, as investors continued to sell the buck on expectations the U.S. economy will likely underperform its peers in the developed world with the surge in new coronavirus cases. By contrast, the euro rose to its highest since early October 2018, still basking in the glow of the European recovery fund approved earlier this week.” (Reuters)
Economic News:
“With some states reimposing restrictions on commerce, particularly tighter rules around bar and restaurant openings, an additional 1.4 million people filed for unemployment insurance – the first time since March and the imposition of a national state of emergency that new claims have risen from the prior week.
The U.S. is still about 14 million jobs shy of where it was in February. About 32 million are collecting weekly unemployment benefits that may be drastically curtailed in coming weeks when expanded federal payments expire, a further blow to the economy’s spending power during the ongoing pandemic recession.
Small business hiring may have plateaued. Data from Homebase, whose users are heavily concentrated among small employers and particularly restaurants, showed the number of workers on the job fell slightly for the week through July 19 and has been largely flat since June.” (Reuters)
“European Union leaders reached a deal on Tuesday on a package of measures to boost their economies after the coronavirus pandemic, agreeing to borrow and spend hundreds of billions of euros in the next few years and pay them back from new taxes.
Key to the deal is a new element in EU policy making: the European Commission will borrow massively on the market and then grant much of the cash, rather than lend it, to countries most in need of economic stimulus.
EU leaders agreed the Commission would cheaply borrow 750 billion euros using its triple-A rating. Of that, it would disburse 390 billion in grants and 360 billion in cheap loans. The grants force the bloc to generate cash to repay the borrowing by 2058.
EU countries will impose a tax on non-recycled plastic and pass on the proceeds to EU coffers. A tax on financial transactions is another option as is a getting some money from extending the emissions trading system to maritime and aviation sectors.
Such new taxes will be expressly allotted to the repayment of the 750 billion borrowing, but they will become part of EU reality for the next 38 years. The grants will be disbursed to countries that present plans that strengthen their growth potential, job creation and economic and social resilience of their economies. The plans also have to make economies greener and more digital and be in line with the Commission’s annual recommendations.
The disbursement will need the approval of a qualified majority of EU governments and be linked to meeting milestones and targets. If any EU government believes such targets had not been met it can ask EU leaders to debate it within three months.” (Reuters)
“China on Wednesday condemned the closure of the Chinese consulate in Houston, which the US State Department said was a move to “protect American intellectual property and American’s private information,” a State Department spokesperson said in a statement to multiple media outlets.
This came as relations with the US and China were tested further amid the coronavirus pandemic. The US Justice Department on Tuesday accused two Chinese hackers of attempting to steal data including US research on Covid-19 vaccines on behalf of the Chinese government.” (Yahoo)
China retaliated against the forced consulate closure by demanding the closure of the US embassy in Chengdu.
Week Ahead Highlights:
Q2 2020 earnings season rolls on, with 33% of the S&P 500 reporting, and 11 DOW stocks reporting, including Apple (NASDAQ:AAPL).
The Fed’s Open Market Committee meets, and Fed Chief’s press conference will be on Wed. Thursday’s Q2 GDP report will be historic – economists are predicting a huge -33% drop.
Next Week’s US Economic Reports:
Sectors:
Basic Materials led this week, aided by the drop in the USD. Real Estate lagged again.
Futures:
WTI rose 1.2% this week, ending at $41.34.
