July 13 – July 17 Week in Review
It was a mixed bag on Wall St. last week as money flowed out of mega-cap technology stocks and into value oriented financial and cyclical stocks, large and small. The S&P 500 advanced 1.3%, the Dow Jones Industrial Average 2.3% and the Russell 2000 3.6%. The Nasdaq Composite finally took a breather and finished down 1.1%.
On the earnings front the big banks kicked off Q2 earnings with announcements of large provisions for credit losses, but that didn't deter investors from investing in this unloved space last week. The S&P 500 financials sector rose as part of the rotational trade.
The industrials and materials sectors benefited the most from this rotation, though, rising more than 5.0%. The health care sector also outperformed, deriving its strength from another round of encouraging vaccine news. The Pfizer and BioNTech collaboration received fast-track designation from the FDA, and Moderna's vaccine candidate elicited neutralizing antibodies in all 45 participants in a Phase 1 study.
Despite the gains overall the market was slowed down by the pullback in mega-cap technology stocks, festering U.S.-China tensions, and a rollback in the reopening process in California due to the rising coronavirus caseload there.
Netflix shares fell 10%, with a bulk of those losses coming after the company issued cautious subscriber guidance on their earnings call. Amazon and Microsoft pulled back 7% and 5%, respectively, following strong performances in the prior week. Apple was up fractionally for the week but closed more than 4% off its intra-week high.
In the bond market U.S. Treasuries finished virtually unchanged. The 2 year yield declined two basis points to 0.14%, and the 10 year yield was unchanged at 0.63%.
In other markets the U.S. Dollar Index declined 0.7% to 95.95, WTI crude finished little changed at $40.56 a barrel and gold closed at $1,812 an ounce.
July 20 – July 24 Economic Calendar