S&P 500 has first drop of July
07/31/17

Last week was one for the record books, but you wouldn’t guess it looking at the market.

Consider these milestones: Volatility in the S&P fell to its lowest level in over a decade. The U.S. dollar hit a new low, while oil pushed to its highest point in almost two months. To top it off, it was also the busiest week of earnings and long-expected health care legislation may have met its demise.

The S&P 500 barely moved despite all that, sliding less than 0.1 percent between Friday, July 21, and Friday, July 28. The bears may have been pleased with it being the first negative week in four, but the bulls could just as quickly retort that July’s still shaping up to be the strongest month since February.

Technology was the main attraction: It delivered a mixed bag. On one hand, names like Facebook (NASDAQ: FB), Advanced Micro Devices (NASDAQ: AMD), PayPal (NASDAQ: PYPL), and Baidu (NASDAQ: BIDU) propelled to new highs amid strong earnings. But on the other, margin pressures eroded sentiment in Alphabet (NASDAQ: GOOGL) and Amazon.com (NASDAQ: AMZN). 

Perhaps the biggest surprise came early Monday when Saudi Arabia pledged to limit crude exports.1 Next, bigger-than-expected inventory drops spurred hope that the oil glut would abate.2 Some strategists even turned bullish on the stuff.3 All told, energy lifted 2.1 percent and made it the best performing sector of the week. Health care led to the downside with a 1.3 percent drop.

S&P 500, 7/24/17 - 7/28/17

Source: OptionsHouse by E*TRADE

Economic news wasn’t a big shocker as the recent pattern of “global good, domestic bad” continued. German business confidence shot to a new record, eurozone sentiment leapt past forecasts to levels unseen this decade, and Chinese industrial profits gained sharply.4 But in the U.S., second-quarter growth missed estimates, jobless claims rose more than feared, and new-home sales failed to impress.5 Want to explain the selloff in the greenback? Look no further.

Boeing (NYSE: BA) was the S&P 500’s best performer last week, soaring 14 percent on blowout results. Automatic Data Processing (NASDAQ: ADP) and Freeport-McMoRan (NYSE: FCX) followed with 12 percent gains. Seagate Technology (NASDAQ: STX) led to the downside with an 18 percent drop. Interpublic Group (NYSE: IPG) was the second worst, down 15 percent.

This week keeps a focus on quarterly results, but also brings key monthly economic data. Here’s a rundown of some important items:

  • Today’s the quietest session with Chicago’s purchasing manager’s index and pending home sales. 
  • Tomorrow brings the Institute for Supply Management’s manufacturing index and personal income. Apple (NASDAQ: AAPL) and Pfizer (NYSE: PFE) lead the earnings parade.
  • Wednesday’s big items are ADP’s private-sector payrolls report and oil inventories.
  • Thursday features jobless claims and ISM’s service-sector gauge. Yum Brands (NYSE: YUM), Activision Blizzard (NASDAQ: ATVI), and Viacom (NASDAQ: VIAB) issue results.
  • The Labor Department’s monthly jobs report is the big enchilada Friday morning.

 

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1. CNBC/Reuters: US crude rises 1.3%, settling at $46.34, after Saudis vow to cap oil exports. 7/24/17.

2. Marketwatch: Oil nears two-month high as EIA reports a drop in U.S. crude supplies for fourth week in a row. 7/26/17.

3. CNBC: The charts are pointing to a comeback for crude: Trader. 7/26/17. CNBC: Goldman Sachs: 'Cautiously optimistic' on oil prices as supply-demand rebalancing. 7/28/17.

4. Reuters: China industrial profits jump most in three months, weather higher financing costs. 7/26/17. Marketwatch: German business sentiment hits record high in July. 7/25/17. RTT News: Eurozone Economic Sentiment Near Decade High. 7/28/17.

5. Marketwatch: New-home sales tread water, miss Wall Street estimates. 7/26/17. RTT News: U.S. Jobless Claims Rise More Than Expected To 244,000. 7/27/17. Business Insider: Consumer spending propels economic growth in the 2nd quarter — but by less than expected. 7/28/17.