Weekly Market Commentary - July 21
Week In Review
Major U.S. equity indices were generally higher for the week, with the S&P 500 closing at a record high
on Thursday, the Nasdaq Composite notching five consecutive days of gains on its way to a record close on Friday, and the Dow Jones Industrial Average basically marking time. Despite some further tariff saber-rattling by the Trump administration, market sentiment was supported by positive economic data and second quarter corporate earnings growth that exceeded analyst expectations. President Trump upped his trade rhetoric by demanding a minimum tariff of 15-20% on imported goods from the EU, the world’s key trading bloc. Fortunately, bullish inflation, retail sales and consumer sentiment reports allayed the related economic concerns from the wavering trade policy. The headline Consumer Price Index for the month of June came in slightly higher than anticipated, with the annual rate nudging up to 2.7%, but core CPI that excludes food and energy prices increased less than expected. In the past five months, core prices are up at just a moderate 2.1% pace.3U.S. retail sales also came in much stronger than forecast, rising 0.6% against a 0.1% estimate, providing evidence of hardy consumer spending. The Michigan Survey of Consumers hit its highest level since February. Strong corporate profits validated the economic news. Fifty-nine S&P 500 companies have reported financial results this season and more than 86% have exceeded expectations.4The S&P 500 surged +0.6% on the news.
This Week
U.S. leading indicators are but one of many economic updates, but market focus will be on corporate profitability. The earnings season resumes with 112 S&P 500 companies reporting results, including Alphabet and Tesla.5
Portfolio Theme
As the S&P 500 establishes new record highs, relative valuation matters. Value Stocks trade at a sizable discount to growth stocks. Simplicity offers portfolios with a value tilt that may provide stability and dividend income.
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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from J.P. Morgan Asset Management.
1Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.
2Index Statistics: P/E Ratio – Displays the forecasted P/E ratio of the representative index ETF. Yield - Dividend-per-share divided by current share price. Table statistics are updated weekly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.
3First Trust. 4FactSet. 5FactSet.
Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.
