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Market Bullets - Weekly Update

For the market week ended Friday, July 26, 2019

  • Upbeat corporate earnings combined with stronger than expected US economic growth to push US Equity markets to fresh all-time highs last week. The S&P 500 climbed 1.7% for the week to bring its gains for the year up to 20.7%. The Nasdaq rallied 2.3% for the week and is now up 25.5% for the year, while the Russell 2000 (small-cap stocks) gained 2.0% for the week and is now up 17.1% for the year.
  • Global equity markets declined last week, as the European Central Bank suggested that the economic outlook for the European economy was getting worse. Developed Markets dropped 0.3% for the week to bring its gains for the year to 12.0%. Emerging Markets fell 0.8% for the week and are now up 8.6% for the year.
  • Economic data continue to suggest a healthy US economy. The preliminary economic growth (Gross Domestic Product) for the US in the second quarter 2019 came in at 2.1%, better than expected. While this is down from the 3.1% growth in the first quarter, it still puts the US on pace to grow around 2.5% for the year.

Of Interst to Us...

  • With about 44% of companies having reported their earnings results for the second quarter, 77% have reported better than expected earnings and 61% have reported better than expected sales results. Both of these are higher than the historical average. Companies with more exposure internationally have fared worse than those that are more US-focused. Specifically, firms with greater than 50% exposure to global markets have reported a 13.6% decline in earnings, while companies with greater than 50% exposure to the US have reported a 3.2% increase in earnings.
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