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Equities Rise on Encouraging Economic Data
Major equity markets were up big last week as concerns of recession eased following an encouraging inflation report and retail sales figure. Global equities (represented by the MSCI All Country World Index) were up 3.90% while domestic stocks (represented by the S&P 500 Index) were down 3.99%.
Consumer Price Index (CPI)
Both the Consumer Price Index (CPI) and Producer Price Index (PPI) came in lower than expectations for the month of July. CPI rose at a 2.9% pace, the first reading below 3% since 2021. Headline CPI rose 2.2%, below the 2.3% forecast.
US Retail Sales
The Commerce Department reported on Thursday that US retail sales rose 1.0% month-over-month for July, beating expectations of 0.4% and the best clip since January 2023. While the largest increase was in auto sales, the gains were broad-based as 11 of 13 categories were positive.
S&P 500 Q2 Earnings
Now with 93% of S&P 500 companies reporting Q2 earnings, the blended earnings growth for the S&P 500 is 10.9% according to FactSet. This would mark the fastest pace since 2021 and exceed analysts’ 8.9% outlook entering earnings season.
Labor Market
Initial claims for unemployment insurance fell for the second straight week to 227,000, easing labor market fears following last month’s worse-than-expected jobs report.
Consumer Sentiment Index
Friday’s preliminary reading of the University of Michigan’s Consumer Sentiment Index showed a shift in gears rising to 67.8 from the previous month’s 66.4 figure and breaking a 4-month streak of declining readings. Consumer expectations around personal finances and economic outlook strengthened while inflation views over the next year remained the same at 2.9%.
Looking Forward
This week the US Federal Reserve will hold their annual Jackson Hole symposium. Investors will focus on Fed Chair Jerome Powell’s remarks on Friday for insight into the direction and velocity of the Fed’s next rate decisions.
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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