E US Stock Market Weekly Review July 20-24

A week with moderate losses for the US stock market amid important earnings reports and new political tensions between the USA and China. A new federal stimulus is expected while coronavirus cases in Florida and Texas remain a major concern for local lockdowns, and now slim chances for a broader national lockdown. The coronavirus cases should be monitored as they can have a large impact on the speed of the US economic recovery.

Economic News

A series of mixed economic news for the previous week sent tech stocks closing lower as they underperformed compared to the S&P 500 and Dow Jones. On Friday, shares of Intel Corporation (INTC) closed lower more than 16% at 50.59-9.81 (-16.24%) on news that its next-generation manufacturing of chips will be delayed at least for 6 months. Could this be a red flag to monitor for other chip stocks? On the same day shares of Advanced Micro Devices, Inc. (AMD) jumped more than 16%, closing at 69.40+9.83 (+16.50%), as investors saw the delay of Intel as an opportunity for Advanced Micro Devices to gain the advantage of it in terms of market share.

The Chicago Fed National Activity Index came in at 4.11 beating expectations of 3.5 indicating strength in overall economic activity. Existing Home Sales were slightly weaker than expected with a figure of 4.72M compared to the forecast of 4.78M. The weekly Continuing Jobless Claims were better than expected with a figure of 16197K compared to the forecast of 17067K. But there was a lot of disappointment with the number of weekly Initial Jobless Claims reported to be 1416K, worse than the forecast of 1300K. This shows that the labor market recovery is still bumpy ahead. The CB Leading Index missed marginally the forecast, showing some weakness for current economic conditions. The actual figure was 2.0%, less than the forecast of 2.1%. Finally on the economic news, the Markit Manufacturing PMI Flash missed the expectation by a slight margin but with several 51.3 compared to the forecast of 51.5 it was in the expansion area, and that is positive for the manufacturing sector. The New Home Sales jumped to 13.8%, a huge increase compared to the forecast of 4%. This should not be a surprise with the historically low interest rated at this moment.

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Disclosure: I have no position in any stock mentioned

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