E US Stock Market Weekly Review July 13- July 17, 2020

A third consecutive higher close for the US stock market for the week ending on July 13, 2020, with supportive economic and vaccine news. The S&P 500 has almost turned positive for the year, and tech stocks continue to outperform on a year-to-date basis, but Nasdaq composite was the only major stock index among Dow and S&P 500 that closed lower for the week. And small-cap stocks outperformed the previous week, so could it be there is a rotation for stocks in various sectors and capitalization among large institutional investors? It is early to say that, but there are some indications.

Economic News

The Core Inflation Rate YoY came in at 1.2%, more than the forecast of 1.1%, and the Inflation Rate YoY came in at 0.6% the same as the forecast, stating not any inflationary pressures in the economy. Still, even if there were inflationary signs the Fed would not raise the key interest rate, as the economic recovery amid the coronavirus era is fragile and uncertain. We anticipate the Q2 GDP Growth Rate to enter a recession and evaluate the degree of economic damage to the economy due to the coronavirus outbreak.

The Retail Sales MoM came in at 7.5%, beating the forecast of 5%, but well below the previous revised reading of 18.2%. Continuing and Initial weekly jobless claims continue to show weakness in the labor market. The Continuing Jobless Claims reading was 17,338,000 and below the forecast of 17.6M but the Initial Jobless Claims figure reported was 1.3M, worse than the forecast of 1.25M. Another positive economic news was Industrial Production MoM with a figure of 5.4%, better than the forecast of 4.3%. On the negative side, the Michigan Consumer Sentiment Preliminary Index was worse than expected with several 73.2, well below the forecast of 79.

U.S. Retail Sales

“Retail sales in the US surged 7.5% month-over-month in June of 2020, following an upwardly revised record 18.2% rise in May. Figures beat market forecasts of a 5% gain as more businesses reopened and domestic trade continues to recover from a slump in April due to the coronavirus lockdown. The biggest increases were seen in sales at clothing stores (105.1%); electronics and appliances (37.4%); furniture (32.5%); sporting goods, music and books (26.5%); food services and drinking places (20%); miscellaneous (17.7%); and gasoline stations (15.3%). Sales also increased at motor vehicle dealers (8.2%); health and personal care (3.5%); and general merchandise (2.7%). In contrast, sales fell for nonstore retailers (-2.4%); food and beverages stores (-1.2%); and building material and gardening equipment (-0.3%). Year-on-year, retail sales went up 1.1%.”

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Disclosure: I have no position in any stock mentioned

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Roger Keats 7 months ago Member's comment

Good read