What happened in the markets: 08 July - 12 July 2024

15 Jul

Aries Yuangga, Wakil Penasihat Berjangka

The week of July 08 - 12, 2024, saw a mixture of economic data releases, corporate earnings, and significant stock movements. With inflation showing signs of moderation and the Federal Reserve's anticipated rate cuts by year-end, the backdrop was set for a compelling market performance. The S&P 500 and Nasdaq reached record highs, reflecting investor optimism. This article delves into the key events and trends that shaped the markets during this week, offering insights into top-performing stocks, upcoming economic data, and earnings outlook.

Last Week at a Glance

Last week, the markets showed resilience and optimism, driven by positive economic indicators and cooling inflation. The S&P 500 rose by 0.9%, closing at 5,615.35, while the Nasdaq inched up by 0.2%, ending at 18,398.44. The Dow Jones Industrial Average also demonstrated strength, climbing by 1.6% to 40,000.90.

Key economic indicators significantly influenced market sentiment. The Consumer Price Index (CPI) inflation fell to 3.0% year-over-year in June, the lowest since March 2021. Meanwhile, the Producer Price Index (PPI) inflation rose slightly to 2.6%, primarily due to wider wholesaler margins, sustainable only with robust end demand. Anticipation of Federal Reserve rate cuts by the end of the year further boosted market sentiment. Moderating inflation could pave the way for a more accommodative monetary policy.

The earnings season kicked off with high expectations, projecting an 8.8% year-over-year earnings growth for the S&P 500 in Q2, the fastest since Q1 2022. This broadening performance is expected to help lagging sectors catch up with the technology and communications services stocks that have led the market. The labor market showed signs of cooling, with the unemployment rate rising to 4.1%, up from the post-pandemic low of 3.4%. This increase, now above the Fed's 2024 forecast of 4.0%, suggests potential downward pressure on wage growth as unemployment rises.

Top movers & shakers🎢

Several individual stocks made headlines with significant price movements driven by a variety of factors, including quarterly earnings reports, analyst ratings, and strategic announcements. Among the notable movers were:

Rivian Automotive (RIVN): 🚗 Climbed nearly 8% following a price target increase from Mizuho and positive production outlooks. Rivian's announcement of expected gross profit in its fiscal fourth quarter and meeting its yearly production goal bolstered investor confidence.
Tesla (TSLA), Toyota (TM), General Motors (GM), and Ford (F): 🚘 These automotive giants enjoyed strong sessions, benefiting from the idea that falling interest rates might make cars more affordable. Ford advanced by 4%, Tesla jumped nearly 3%, and both Toyota and GM rose around 2%.
Lennar (LEN) and D.R. Horton (DHI): 🏠 Homebuilders saw their stocks gain over 2.5% for the second day in a row, driven by hopes of falling rates boosting the housing market.
Lowe's (LOW) and Home Depot (HD): 🏡 Both companies, closely tied to the housing market, saw nearly 2% increases.
Nvidia (NVDA), Intel (INTC), Advanced Micro Devices (AMD), and Micron (MU): 💻 Semiconductor companies rebounded from Thursday's sell-off, with the PHLX Semiconductor Index (SOX) rising 1.3%.
JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C): 🏦 These investment banks kicked off the earnings season. JPMorgan Chase reported a 22% year-over-year increase in revenue, easily beating the FactSet average consensus. Wells Fargo faced a 9% year-over-year drop in net interest income but saw strong performance in investment advisory and trading. Citigroup's earnings reflected solid Wall Street trading operations, with EPS surpassing average analyst estimates.

These movements illustrate the diverse factors influencing stock prices, from company-specific news to broader market trends. Investors should continue to monitor these and other key players as they navigate the evolving financial landscape.

The Week Ahead: July 15 - 19, 2024

The coming week is packed with important economic data releases that will be closely watched by investors and policymakers alike:

Housing Starts for June: Scheduled for release on July 17, this data will provide insights into the health of the housing market. A strong housing market can indicate economic stability and consumer confidence.
Retail Sales Data for June: Expected on July 18, this report will offer a glimpse into consumer spending patterns. Retail sales are a crucial indicator of economic health, as they reflect consumer confidence and purchasing power.
Industrial Production for June: Slated for release on July 16, this data will highlight the manufacturing sector's performance. Industrial production is a key indicator of economic strength and industrial capacity utilization.

Key Earnings Reports

Several major companies are set to report their quarterly earnings in the coming week, providing further insights into corporate health and sector performance:

Goldman Sachs (GS): 💼 Reporting on July 15, Goldman Sachs has topped analysts' estimates for three consecutive quarters. With the stock up 24% since the last earnings report, the bar is set high. Investors will be closely watching for updates on trading revenue, investment banking performance, and any forward guidance.
Bank of America (BAC) and Morgan Stanley (MS): 🏦 Both banks will report on July 16. Their performance will provide further insights into the financial sector's health and the impact of interest rates on their operations. Analysts will be looking for updates on loan growth, net interest margins, and any commentary on economic outlook.
Johnson & Johnson (JNJ): 💊 Set to report on July 16, J&J's earnings will be closely watched for its impact on the healthcare sector. Investors will be interested in the performance of its pharmaceutical and medical device segments, as well as any updates on its pipeline of new products.
United Airlines (UAL) and UnitedHealth (UNH): ✈️💉 Both companies will report on July 17. United Airlines' results will shed light on the travel industry's recovery, with a focus on passenger demand and capacity. UnitedHealth's earnings will reflect the healthcare sector's performance, with analysts looking for updates on membership growth and cost management.
American Express (AXP): 💳 Reporting on July 18, AXP's results will offer insights into consumer spending and credit trends. Investors will be looking for updates on card member spending, credit quality, and any guidance on future business trends.

Conclusion

The week of July 08 - 12, 2024, was marked by positive market performance, driven by cooling inflation and high expectations for the upcoming earnings season. Key economic indicators, such as the CPI and PPI, shaped investor sentiment, while significant stock movements highlighted the diverse factors influencing the market. As we look ahead to the week of July 15 - 19, 2024, important economic data releases and earnings reports from major companies like Goldman Sachs, Bank of America, and Johnson & Johnson will provide further insights into the economic and corporate landscape, guiding investor decisions in a dynamic market environment.

Source:

https://www.schwab.com/learn/story/schwab-market-update

https://www.edwardjones.com/us-en/market-news-insights/stock-market-news/stock-market-weekly-update

*Disclaimer:

This information is provided for general information purposes only. Consider your investment objectives, financial resources and other relevant circumstances carefully before investing. This is not an invitation or an offer to invest, nor is it financial advice or a recommendation to buy or sell any investment.

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