Markets: The market had strong gains this week, spurred on by Fed chief Yellen’s dovish interest rate comments before Congress in mid-week. The S&P 500 and Dow hit new all-time closing highs on Friday, helped by rising Crude prices, which were up this week, due to reports of a setback for Nigerian crude supplies and a recent forecast for higher oil demand this year.
Shares of JPMorgan (NYSE:JPM), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC) were down, despite reporting quarterly profits that beat analysts’ expectations, as investors saw limited advantages for the big banks from the prospect of fewer rate hikes. Tech came roaring back, pushing the NASDAQ up 2.8% on the week.
Dividend Stocks Update: These high dividend stocks go ex-dividend this coming week: CODI (NYSE:CODI), HRZN (NASDAQ:HRZN), SUNS (NASDAQ:SUNS), CPTA (NASDAQ:CPTA), GAIN (NASDAQ:GAIN), GLAD (NASDAQ:GLAD), GOOD (NASDAQ:GOOD), HPT (NASDAQ:HPT), SNH (NASDAQ:SNH), SIR (NASDAQ:SIR).
Volatility: The VIX tumbled 15% this week, finishing at $9.51, its lowest close since 1993, and its 3rd lowest close ever.
Currency: The dollar fell vs. most other major currencies this week, with the diminished chances of Fed rate hikes until December:
Market Breadth: 24 of the DOW 30 stocks rose this week, vs. 17 last week. 74% of the S&P 500 fell, vs. 56% last week.
Economic News: Fed chief Yellen’s testimony was the week’s highlight, with her dovish rate hike comments, and noting that inflation remains soft, in addition to wages still being lower than anticipated. Yellen said future rate hikes could be gradual in the face of persistently low inflation. It looks like we won’t see any more rate hikes until December, and the market is putting a Dec. hike at around a 50% probability.
Retail sales disappointed, falling -0.2% in June, far below the 0.1% forecast. Consumer Sentiment was lower than forecasted, but still remains high, at 93.1.
Week Ahead Highlights: Q2 Earnings season heats up, with 9 DOW stocks reporting, including economic bellwether GE. Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS) will also report results next week.
The bar for earnings is higher this time around, especially after the big profits growth reported for Q1.
The S&P 500 is trading at 17.3 x forward earnings, above its long-term average of 15x.
Next Week’s US Economic Reports: It’ll be a light data week, 3 Housing reports due out Tue-Wed, and the Leading Economic Indicators report due out on Thursday.
Sectors and Futures: Tech returned to the lead this week, as Financials and Telecoms trailed.
WTI Crude futures had another good week, rising 5.54%, aided by production problems in Nigeria, and a forecast for increased demand in 2017. Natural Gas also rose, up 3.95% this week:
