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Market Recap
WEEK OF JUL. 10 THROUGH JUL. 14, 2023
The S&P 500 rebounded this week amid growing signs that inflation was easing ahead of the Federal Reserve's next interest-rate decision scheduled for later this month, while JPMorgan Chase (JPM) and Wells Fargo's (WFC) Q2 results topped Wall Street's views. The benchmark index rose 2.4% to 4,505.42 from last week's close of 4,398.95.
All sectors notched gains for the week, led by communication services' 3.4% increase and consumer discretionary's 3.3% rise. Technology, real estate, materials, utilities, industrialsand health care rose more than 2% each. Financials saw a roughly 2% increase, while consumer staples and energy advanced 1.2% and 0.6%, respectively.
Official data released during the week showed annual consumer inflation in the US cooled for the 12th consecutive month in June, while producer prices eased more than projected, signaling continued improvement in inflation. Still, markets are widely expecting the Federal Open Market Committee to increase its benchmark lending rate by 25 basis points on July 26.
Following 10 consecutive hikes, the FOMC left interest rates unchanged at 5% to 5.25% in June, saying the move would allow it "to assess additional information and its implications for monetary policy." However, minutes from the June meeting released earlier this month showed that almost all participants "judged that additional increases in the target federal funds rate during 2023 would be appropriate."
Within financials, Wells Fargo posted a quarterly beat amid continued benefits from higher interest rates and loan balances, while JPMorgan's results got a boost from its acquisition of the failed First Republic Bank in May. Citigroup's (C) Q2 revenue dropped year-over-year but topped the Street views.
Franklin Resources (BEN) jumped 8.8% for the week after reporting higher preliminary month-end assets under management for June, while Progressive (PGR) plummeted 11%, after Q2 results fell short of the Street's estimates.
Activision Blizzard (ATVI) helped lead the surge in communication services, with the company's stock up 9.3% for the week. Microsoft's (MSFT) proposed acquisition of the video-game developer in a $68.7 billion deal moved a step closer to completion after a federal court judge denied the US Federal Trade Commission's temporary injunction request seeking to stop the takeover. The FTC said it plans to appeal the ruling.
Technology got a boost from a 9.4% gain in Salesforce (CRM), which announced plans to increase its list prices, and a 7% surge in Nvidia (NVDA), which invested $50 million in Recursion Pharmaceuticals (RXRX) via a private investment in public equity deal.
Consumer discretionary's rally was led by a 13% jump in Domino's Pizza (DPZ), which announced an agreement with Uber (UBER) allowing US customers to place orders using the Uber Eats and Postmates apps.
Within consumer staples, PepsiCo (PEP) shares rose 2.8% as it increased its outlook after logging higher fiscal Q2 results that topped market expectations.
In energy news, the International Energy Agency lowered its 2023 global oil demand growth forecast, citing "persistent" macro challenges, while the Organization of the Petroleum Exporting Countries raised its outlook amid higher use in China.
Materials advanced for the week despite an 8.7% decline in FMC (FMC), which lowered its revenue guidance.
Some of the major earnings scheduled for this upcoming week include Goldman Sachs (GS), PNC Financial Services (PNC), Morgan Stanley (MS), Bank of America (BAC), Bank of New York Mellon (BK), U.S. Bancorp (USB), Netflix (NFLX) and Tesla (TSLA). American Express (AXP), Lockheed Martin (LMT), Prologis (PLD), Johnson & Johnson (JNJ), United Airlines (UAL) and American Airlines (AAL) also report next week.
On the economic front, this weeks calendar includes the retail sales and industrial production reports for June, the housing starts and existing-home sales data for last month, as well as the July regional manufacturing reports from the New York and Philadelphia Feds.
