Telemus Weekly Market Review

July 31 – August 4 Week in Review

The Dow Jones Industrial Average had yet another bullish week as the industrial average ended Friday at a record high, for the eighth session in a row, and a weekly gain of 1.20%. However, the S&P 500 and the Nasdaq told a less conclusive story because the S&P 500 had to muscle its way to a modest victory, adding 0.19%, while the Nasdaq dropped 0.36%.

Regardless of this week’s mixed performance, there’s no question that investors are still bullish as stocks hover near all-time highs and the CBOE Volatility Index (VIX) hovers near an all-time low.

The week’s most notable headlines in chronological order:

  • Crude oil settled July with its best one-month gain since April 2016
  • The core PCE Price Index for June hit expectations as did personal spending, but personal income fell short
  • Sprint spiked after beating earnings estimates, raising its profit guidance, and saying it believes an M&A announcement will come “in the near future”
  • American automakers General Motors and Ford Motor tumbled following disappointing July sales figures
  • Apple jumped after beating both top and bottom line estimates and implying that its much-anticipated iPhone 8 release is on track
  • Treasuries rallied after the Bank of England decided to leave interest rates unchanged in a 6-2 vote
  • Tesla beat both top and bottom line estimates and announced that its Model 3 production is on track
  • The Employment Situation Report for July soundly beat estimates, showing the addition of 209,000 nonfarm payrolls however, average hourly earnings remained subdued, increasing just 0.3%

Of those headlines, two are worth a closer look–Apple’s earnings report and the Employment Situation Report for July. Apple is the S&P 500’s largest component by market cap and has played a huge role in the stock market’s 2017 advance, evidenced by the massive 29.6% year-to-date gain it took into Tuesday night’s earnings release.

Needless to say, it’s quite impressive that the company was able to deliver in the face of such lofty expectations. However, it’s also important to note that much of the positive sentiment surrounding the company has to do with its upcoming iPhone 8 release, which has been generating hype for months. So far, everything looks to be on track for the fall release, but if that changes, so might the bullish bias.

As for the July jobs report, the key take away is it hit the sweet spot once again as job growth was strong but wage growth was not, keeping inflationary concerns at bay. The fed funds futures market points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 50.4%. Last week, the market expected the next hike to occur in January. The benchmark 10-yr yield fell three basis points for the week to 2.26%.

Four sectors settled the week in the green–financials utilities, industrials, and technology –while seven groups finished in the red — energy, materials, health care, consumer staples, consumer discretionary, real estate, and telecom services.

Crude oil dropped 0.5% for the week closing Friday at to $49.44.

August 7 – August 11 Economic Calendar

  • Monday
  • Gallup US Consumer Spending Measure
    8:30 AM ET
  • Labor Market Conditions Index
    10:00 AM ET
  • James Bullard Speaks
    11:45 AM ET
  • TD Ameritrade IMX
    12:30 PM ET
  • Neel Kashkari Speaks
    1:25 PM ET
  • Consumer Credit
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • NFIB Small Business Optimism Index
    6:00 AM ET

  • Redbook
    8:55 AM ET
  • JOLTS
    10:00 AM ET
  • TD Ameritrade IMX
    12:30 PM ET
  • Neel Kashkari Speaks
    1:25 PM ET
  • Consumer Credit
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Productivity and Costs
    8:30 AM ET
  • Wholesale Trade
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Charles Evans Speaks
    1:00 PM ET
  • Consumer Credit
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • PPI-FD
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • William Dudley Speaks
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Consumer Price Index
    8:30 AM ET
  • Robert Kaplan Speaks
    9:40 AM ET
  • Neel Kashkari Speaks
    11:30 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Neel Kashkari Speaks
    1:25 PM ET
  • Consumer Credit
    3:00 PM 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.