NDS Weekly Commentary 7.20.20 – Earnings Season Starts to Ramp Up

July 20, 2020

Equity markets were somewhat mixed last week as the S&P 500 and DJIA advanced 1.3% and 2.3%, respectively. However, investors appeared to be taking profits in the technology sector, which has been the best performing sector YTD, as the NASDAQ was down -1.1% for the week. Also, value stocks outperformed last week as the Russell 1000 Value Index rose 3.4% vs the Russell 1000 Growth which was -0.8%. Reflecting that shift, the best performing sectors were industrials and materials and the worst were technology and consumer discretionary. International equities were mixed as the EAFE index rose 2.2% and emerging stocks declined 1.2%. Fixed income markets were relatively flat last week as the rate on the 10 year U.S. Treasury declined slightly to 0.64%.

In economic news last week, CPI for June was announced at 0.6%, a slight increase over expectations. Retail sales advanced 7.5% also exceeding expectations of 5.0% and housing starts were up 17.3% month over month. The Labor Dept. reported initial jobless claims of 1.3 million. This week look for economic reports on mfg. and srvs. PMI and new/existing home sales. Earnings season also ramps up this week with major companies Coca Cola, Microsoft, Intel, Tesla and Verizon to report. Last week major banks reported better-than-expected earnings in spite of large increases in loan loss reserves.

We expect going forward that investors will focus on the surge of confirmed cases of the Coronavirus in the southern and western U.S., its impact on the re-opening of the U.S. economy, and the upcoming election.

Don’t forget to wear your masks and stay safe.

“Nothing great in the world has ever been accomplished without passion.” – Georg Wilhelm Friedrich Hegel