Market Insights: Stocks Jump After Inflation Gauge Cools

A Friday surge pushed stocks solidly into positive territory last week, ignited by cooling in an inflation gauge closely tracked by the Federal Reserve.The Dow Jones Industrial Average advanced 0.66%, while the Standard & Poor’s 500 climbed 1.01%. The Nasdaq Composite index rose 2.02% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.74%.1,2,3
Stocks PopStocks were flat for much of last week amid a batch of new earnings, a 0.25% interest rate hike, and strong economic data. After beginning with gains, stocks lost momentum following the Fed’s expected rate-hike announcement on Wednesday. A bounce on Thursday sparked by a positive mega-cap tech company earnings reversed after bond yields increased. Stocks recovered strongly Friday on the release of the personal consumption expenditures price index, which fell to its lowest level in two years.4Much of the market action was related to earnings results. With 44% of S&P 500 companies reporting, 78% have exceeded Wall Street forecasts.5Recession DeferredExpectations of a recession were high coming into 2023. Last week may have erased this recession narrative overhang. Second-quarter gross domestic product (GDP) data released last week was one big reason why. Economic activity expanded by 2.4%, which was above the forecast of two percent and represented an acceleration from its first quarter GDP of 2.0%. Consumer spending was a major driver of that expansion, rising 1.6%.6Joining the recession-deferred camp this week was Fed Chair Powell, who stated that the Fed was no longer forecasting a recession. This Week: Key Economic DataTuesday: Institute for Supply Management (ISM) Manufacturing Index. Job Openings and Labor Turnover Survey (JOLTS).Wednesday: Automated Data Processing (ADP) Employment Report.Thursday: Jobless Claims. Institute for Supply Management (ISM) Services Index. Friday: Employment Situation.Source: Econoday, July 28, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.This Week: Companies Reporting EarningsMonday: Arista Networks, Inc. (ANET), ON Semiconductor Corporation (ON)Tuesday: Advanced Micro Devices, Inc. (AMD), Pfizer, Inc. (PFE), Caterpillar, Inc. (CAT), Starbucks Corporation (SBUX), Merck & Co., Inc. (MRK), Prudential Financial, Inc. (PRU), Rockwell Automation, Inc. (ROK)Wednesday: CVS Health Corporation (CVS), Qualcomm, Inc. (QCOM), PayPal Holdings, Inc. (PYPL), Shopify, Inc. (SHOP), Albemarle Corporation (ALB), Emerson Electric Co. (EMR), Humana, Inc. (HUM)Thursday: Apple, Inc. (AAPL), Block, Inc. (SQ), Gilead Sciences, Inc. (GILD), Amgen, Inc. (AMGN), Cigna Group (CI), Occidental Petroleum Corporation (OXY), Fortinet, Inc. (FTNT), ConocoPhillips (COP), Booking Holdings, Inc. (BKNG), Regeneron Pharmaceuticals, Inc. (REGN)Friday: EOG Resources, Inc. (EOG)Source: Zacks, July 28, 2023
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Footnotes and Sources
1. The Wall Street Journal, July 28, 2023.2. The Wall Street Journal, July 28, 2023.3. The Wall Street Journal, July 28, 2023.4. CNBC, July 28, 2023.5. CNBC, July 27, 2023.6. CNBC, July 27, 2023.7. IRS.gov, May 1, 20238. Prevent Cancer Foundation, April 24, 2023
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.Please consult your financial professional for additional information.This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.Copyright 2023 FMG Suite.
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Shari Burnum

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Investor’s Resource, a greater Huntsville Alabama financial advisor, delivers expertise in family planning, including portfolio management, retirement planning, and risk management.

Securities offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. Advisory Services offered by Investment Advisory Representatives of RFG Advisory, LLC., a registered investment advisor.  Private Client Services, Investor’s Resource and RFG Advisory are unaffiliated entities.