Despite hitting all new highs in the previous week, equity markets could not keep up the positive momentum. The S&P 500 slipped a few points from the high watermark, falling to 2173.6. The Dow (-1.0%) dropped while the NASDAQ (1.2%) rallied from a good week in tech (1.4%). U.S. companies continued second quarter earnings season, with (64% of reported filings) approximately 73% of companies beating market expectations. While markets may not have celebrated the good news, the S&P 500 reported positive year-over-year revenue growth for the first time since fourth quarter 2014.
Economic markets shared similar lack of excitement to that of the capital markets over the last few days. With the release of second quarter GDP estimates, many were disappointed to find a 1.2% annualized growth rate, well below the initial 2.6% estimate. Similarly first quarter GDP was revised lower to 0.8% from the prior estimate of 1.1%. Following last week’s GDP release, markets will look to the Labor Department’s report on non-farm payrolls in hopes of continuing the robust rebound from June (287,000 additional jobs vs. 11,000 in May).
A few other notable highlights from the week include a marginal drop in oil prices. Crude oil prices stabilized in recent weeks, albeit the Baker Hughes most recent report shows an increase in rig count and the commodity has depreciated approximately 10% in response. The BoJ disappointed many investors with only a minimal increase to their current QE-program. Many expected more aggressive asset purchasing and the yen appreciated against the USD as a result. The USD depreciated against most major currencies over the last week as fear and uncertainty over Brexit and international instability subsided. In response to the discouraging GDP report, bond prices rose and the 10-year treasury settled at 1.52%.
