By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- The focus this week will be on second-quarter earnings, which continue to roll in. Both Alphabet and Tesla will report this week, and they will be closely watched after the last several weeks of rotation out of the Magnificent Seven. Of the 70 members of the S&P 500 that have reported so far this quarter, 57 (81.4%) have posted positive earnings surprises, and earnings and the economy are expected to remain supportive of stocks in the second half of the year.
- The economic calendar includes new and existing home sales and the Federal Reserve Board’s (Fed’s) favored measure of inflation: core personal consumption expenditures (PCE). Core PCE is expected to come in at 2.5%, which would represent the lowest reading since March 2021. The Fed’s target for core PCE remains 2.0%.
- There are no major appearances by Fed speakers this week, as they have entered the blackout period prior to next week’s Federal Open Market Committee meeting. Other notable events include a three-day Bitcoin conference, the opening of the summer Olympics in Paris and the market’s reaction (if any) to the news that the President will not run for re-election.
Three Things to Know
- After peaking at 5.6%, core PCE has fallen to half of that reading, last at 2.6%. (Source: Haver Analytics)
- On Sunday, March 31, 1968, Lyndon B. Johnson appeared on national television and announced that he was partially halting the U.S. bombing of Vietnam, and that he had decided not to seek his party’s nomination for president. “There is division in the American house now,” Johnson declared. The next day the S&P 500 was up 2.5%. (Source: history.com)
- The S&P 500 has hit 37 all-time highs this year, the most since 2021. The index has already seen more new records than in every year since 2016, except for 2017 and 2021. It is on pace to hit the third-most all-time highs in history, only behind 2021 and 1995, which saw 70 and 77 records. Overall, the S&P 500 is up 17% year-to-date, which marks the 12th best start to a year in the entire stock market history. (Source: The Kobeissi Letter)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.