John Hancock: Weekly Market Recap Week Ended July 10

Earnings build-up

Wall Street analysts modestly boosted their expectations as major U.S. banks prepared to open quarterly earnings season. As of Friday, analysts surveyed by FactSet were forecasting an average second-quarter earnings growth rate of 23.6% for companies in the S&P 500, up from a 23.3% forecast a week earlier. Either outcome would mark the second consecutive quarter of growth exceeding 20%.

Volatility eases

An index that tracks investors’ expectations of short-term U.S. stock market volatility fell for the second week in a row, slipping to its lowest level in more than six months. The Cboe Volatility Index finished the week at 15.0, down from a recent high of 22.2 reached on June 10.

Elevated yields

Prices of U.S. government bonds fell for the second week in a row, sending yields to their highest levels since mid-May amid persistent concerns about inflation and interest rates. The 10-year Treasury yield finished the week at 4.56%, up from 4.37% a couple of weeks earlier. The 30-year Treasury ended at 5.06%, up from 4.87% two weeks earlier.

Fed chair, CPI ahead

The new week’s calendar will be packed, as recently installed U.S. Federal Reserve Chair Kevin Warsh is scheduled to testify before House and Senate panels on Tuesday and Wednesday, respectively, and present a monetary policy update. In addition, a U.S. Consumer Price Index report scheduled for release on Tuesday will provide a monthly update on inflation.

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