Telemus Weekly Market Review

July 24 – July 28, 2017

Investors had a massive pile of earnings reports to work through this week. The results were generally positive, but equities still sold off in some instances as many companies rallied for several weeks in front of their reports, pricing in much of the good news beforehand. The S&P 500 finished the week just 0.02% lower, the Nasdaq dropped 0.20%, and the Dow outperformed, climbing 1.16%.

The stock market began the week with a rather range-bound performance on Monday as small victories from the top-weighted technology and financials sectors roughly canceled out losses from the nine remaining groups. Alphabet helped carry the tech space, muscling one more win ahead of its earnings report, which crossed the wires on Monday evening.

Alphabet reported better than expected earnings and revenues, but slid 2.9% on Tuesday nonetheless. In general, earnings continued to eclipse expectations on Tuesday with Caterpillar, McDonald’s, DuPont, and United Technologies all beating earnings per share estimates. The positive results helped push the S&P 500 and the Nasdaq to modest victories and new record highs.

The Dow joined the record-high club in the midweek session, outpacing its peers on the back of Boeing . The airplane maker surged 9.9% after reporting better than expected earnings and raising its earnings guidance for the fiscal year. Wireless giant AT&T also moved solidly higher, adding 5.0%, following its latest quarterly report, which showed above-consensus earnings.

Investors took a break, albeit a short one, from earnings season on Wednesday afternoon when the Fed released its latest policy directive. However, the release largely turned out to be a nonevent. The FOMC decided to keep the fed funds target range at 1.00%-1.25%, as expected, and noted that it expects to begin paring its balance sheet “relatively soon”, which was interpreted by many to mean September.

Earnings came back into focus on Thursday with Facebook headlining the lineup. The social media giant jumped to a new record high after reporting better than expected earnings and revenues, however, the company gave back a good portion of said advance as tech stocks began to sell off in the afternoon, pushing the technology sector to the bottom of the leaderboard.

Transports struggled mightily on Thursday, sending the Dow Jones Transportation Average lower by 3.1%. The DJTA’s weakness was broad, but UPS and Southwest Airlines exhibited particular weakness despite beating earnings estimates. However, on a positive note, Verizon surged 7.7% on better than expected revenues. Equity indices settled mixed with the S&P 500 losing 0.1%.

Moving into Friday’s session, investor sentiment was down mildly after Amazon reported worse than expected earnings on Thursday evening. The e-commerce giant dropped 2.5%, but the broader market held up relatively well with the Dow settling at another record high, its third in a row. Also of note, the advance estimate of Q2 GDP came in slightly below expectations.

Following this week’s policy directive, the fed funds futures market now points to the January FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 50.8%. At this time last week, investors were anticipating the next rate hike to occur in December. The 10 year U.S. Treasury note closed at 2.29% on Friday.

Crude oil closed at $49.79 a gain of over 6% for the week as a drop in U.S. crude supplies sparked investor interest.

July 31 – August 4 Economic Calendar

  • Monday
  • Chicago PMI
    9:45 AM ET
  • Pending Home Sales Index
    10:00 AM ET
  • Dallas Fed Mfg Survey
    10:30 AM ET
  • Farm Prices
    3:00 PM ET
  • Construction Spending
    10:00 AM ET
  • Gallup US ECI
    2:00 PM ET
  • John Williams Speaks
    3:30 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Personal Income and Outlays
    8:30 AM ET

  • Redbook
    8:55 AM ET

  • PMI Manufacturing Index
    9:45 AM ET

  • ISM Mfg Index
    10:00 AM ET

  • Construction Spending
    10:00 AM ET
  • Gallup US ECI
    2:00 PM ET
  • John Williams Speaks
    3:30 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
  • ADP Employment Report
    8:15 AM ET
  • Gallup U.S. Job Creation Index
    8:30 AM ET
  • Treasury Refunding Announcement
    8:30 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Loretta Mester Speaks
    11:00 AM ET
  • John Williams Speaks
    3:30 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Challenger Job-Cut Report
    7:30 AM ET

  • Jobless Claims
    8:30 AM ET

  • Gallup Good Jobs Rate
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • PMI Services Index
    9:45 AM ET
  • Factory Orders
    10:00 AM ET
  • ISM Non-Mfg Index
    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
  • Employment Situation
    8:30 AM ET

  • International Trade
    8:30 AM ET

  • Baker-Hughes Rig Count
    1:00 PM ET

  • Farm Prices
    3:00 PM ET
  • Construction Spending
    10:00 AM ET
  • Gallup US ECI
    2:00 PM ET
  • John Williams Speaks
    3:30 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.