Telemus Weekly Market Review

July 10 – July 14

The stock market got off to a sluggish start this week, but Fed Chair Janet Yellen’s semi-annual testimony before Congress on Wednesday sparked a rally that lingered all the way into Friday’s closing bell. In the end, the S&P 500 registered its largest weekly gain since the end of May and settled Friday’s session at a new record close. For the week, the S&P 500 advanced 1.41%, the Dow 1.04% and the Nasdaq 2.59%.

For the most part, the first two sessions of the week were uneventful. The stock market did make a sharp move lower on Tuesday after Donald Trump Jr. tweeted an email exchange that involved him setting up a meeting with a Russian lawyer in an attempt to gain some possibly incriminating information on then-presidential candidate Hillary Clinton. However, the bearish sentiment didn’t last and the S&P 500 entered Wednesday’s session flat for the week.

Equities rallied in the midweek session after Fed Chair Janet Yellen’s semiannual monetary policy testimony came off less hawkish than many were anticipating. One of the key takeaways from Ms. Yellen’s prepared remarks was her acknowledgment that “the federal funds rate would not have to rise all that much further to get to a neutral policy stance.” The statement created a sense that the Fed may in fact follow a shorter path of rate hikes that will keep the longer-run neutral level of the federal funds rate below levels that prevailed in previous decades.

The S&P 500 leaned on its most influential sectors, namely technology and financials, to capture its third win of the week on Thursday. The financial sector’s positive performance was particularly notable as the group plays an important role in driving economic activity and had failed to keep pace with the broader market in the three prior sessions. Financials remained a focal point once again on Friday with JPMorgan Chase, Wells Fargo, and Citigroup all reporting earnings.

All three of the aforementioned banks posted better than expected earnings but the results were just not enough, at least in the market’s mind, to justify the bullish six-week run that they rode into Friday’s session. The financial sector settled in the red, losing roughly 0.50%, but the S&P 500 managed to advance to a new all-time high thanks to gains from ten of its eleven sectors.

In addition to earnings, economic data was also a focal point on Friday as below-consensus retail sales and core CPI readings for the month of June prompted a rally in the Treasury market; the benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, dropped three basis points to 2.32%, ending the week with a nearly seven-basis point loss.

Like Treasury yields, rate-hike expectations were also dialed back a bit this week. However, the fed funds futures market still points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 50.6%. This time last week, the implied probability of a December rate hike sat at 59.1%.

Crude oil closed the week at $46.68 a gain of over 5% for the week. The world’s appetite for oil is rebounding this year and should increase through 2018, the International Energy Agency said Thursday. In its closely watched monthly oil market report, the IEA said it now expects global demand to grow by 1.5% this year to 98 million barrels a day, driven in part by rising consumption in Germany and the U.S. during the second quarter.

July 17 – July 24 Economic Calendar

  • Monday
  • Empire State Mfg Survey
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • Housing Market Index
    10:00 AM ET
  • Treasury International Capital
    4:00 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Import and Export Prices
    8:30 AM ET

  • Redbook
    8:55 AM ET
  • Housing Market Index
    10:00 AM ET
  • Treasury International Capital
    4:00 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Housing Starts
    8:30 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • Philadelphia Fed Business Outlook Survey
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Baker-Hughes Rig Count
    1:00 PM ET

  • Redbook
    8:55 AM ET
  • Housing Market Index
    10:00 AM ET
  • Treasury International Capital
    4:00 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This market commentary is a matter of opinion and is for informational purposes only.  It is not intended as investment advice and does not address or account for individual investor circumstances.  Investment decisions should always be made based on the client’s specific financial needs, goals and objectives, time horizon and risk tolerance.  The statements contained herein are based solely upon the opinions of Telemus Capital, LLC.  All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.