John Hancock: Weekly Market Recap Week Ended July 14

Inflation relief

A midweek report on U.S. inflation gave the stock market plenty of lift, as the government’s Consumer Price Index fell to an annual rate of 3.0% in June, the lowest level since March 2021. The rate has steadily dropped since peaking at a four-decade high of 9.1% in June 2022. A separate report on Thursday showed easing inflationary pressures at the wholesale level as well.

Earnings liftoff

Earnings season got into full swing on Friday as three major U.S. banks reported second-quarter results, and each one exceeded analysts’ expectations for net income and revenue. However, as of Friday, analysts were forecasting that earnings for all companies in the S&P 500 fell by an average of 7.1% overall, according to FactSet.

Yield volatility

The latest inflation data eased concerns about the pace of further interest-rate increases, and the previous week’s sharp rise in government bond yields reversed course. The yield of the 10-year U.S. Treasury bond dropped from 4.05% at the close of last week to 3.82% on Friday. The 2-year note’s yield fell from 4.94% to 4.73%.

Retail data ahead

A report on U.S. retail sales scheduled to be released on Tuesday will indicate whether the positive momentum from April and May extended into June. Despite inflationary pressures, month-over-month retail sales rose 0.3% in May following a 0.4% rise in April. As recently as March, retail sales had been trending in a negative direction.

Source: https://wmr.jhinvestments.com/