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Stocks Mixed
With earnings season well under way, the Dow and the S&P 500 posted their second weekly gains in a row while the NASDAQ finished slightly lower. Through Friday – and the second week of earnings season – the proportion of S&P 500 companies that had beaten analysts’ quarterly net income expectations stood at 75%, according to FactSet.
The Dow’s tiny 0.01% gain on Friday marked that index’s 10th positive trading day in a row. Solid quarterly earnings results from several components of the 30-stock index provided the key catalyst to extend the positive streak for the Dow, which has added more than 4% overall over its 10-day run.
After moving sharply higher and then lower in the first half of July, government bond yields held steady in the latest week as investors looked ahead to a U.S. Federal Reserve meeting that concludes on Wednesday. The Fed is widely expected to lift its key benchmark rate by 0.25% after pausing its rate hiking cycle at its June meeting.
Although the NASDAQ has outperformed the Dow by a wide margin year to date, the more tech-oriented NASDAQ on Thursday sustained its biggest one-day percentage decline in more than four months. Some of the earnings data from two of the biggest companies in the NASDAQ fell short of expectations, and the index dropped more than 2% for the day.
Shares of several U.S. regional banks rallied after their quarterly earnings exceeded expectations in the wake of recent bank failures and deposit outflows. Many of the biggest regional names reported that second-quarter deposits were stable or higher than in the first quarter, and a handful of banks saw their shares rise more than 10% for the week.
U.S. retail sales rose in June by 0.2% from the previous month, short of most economists’ expectations. However, the previous month’s sales growth figure was revised upward to 0.5% from an initial estimate of 0.3%, pointing to continued resilience of the retail sector as inflationary pressures ease.
China reported that its economy expanded at an annual rate of 6.3% in this year’s second quarter. The result was well below most economists’ forecasts and another sign that China’s post-pandemic economic rebound has so far fallen short of expectations. Relative to the first quarter, GDP expanded at a 0.8% pace, slower than the 2.2% quarter-on-quarter pace recorded in the first three months of 2023.
The U.S. government on Thursday is scheduled to release its initial estimate of second-quarter economic growth, with most economists expecting that GDP rose at a moderate clip, despite some earlier predictions that the economy could be on the verge of a recession. The upcoming report comes a month after the government revised its first-quarter GDP estimate upward to an annual growth rate of 2.0% versus an earlier estimate of 1.3%.
Source: John Hancock Investment Management
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