John Hancock: Weekly Market Recap Week Ended July 19th

Early optimism

Earnings season got off to a solid start, with more than 80% of S&P 500 companies that had reported as of midweek exceeding analysts’ forecasts. Initial results from companies such as Microsoft fueled talk that second-quarter earnings could rise slightly from the same period a year ago rather than decline by around 3%, as had been forecast at the start of the reporting period.

Fed chatter

Comments from a U.S. Federal Reserve board member appeared to strengthen investor expectations that the Fed will cut interest rates at its next policy meeting on July 30-31. Stocks climbed on Thursday after New York Fed President John Williams said central banks must take swift action when faced with adverse economic conditions.

Main Street momentum

Major banks’ second-quarter earnings got a much bigger lift from consumer operations than from lending to businesses. Consumer borrowing and spending boomed in an environment of low interest rates and low unemployment. Corporate clients were more cautious as a result of uncertainties about global economic growth.

GDP ahead

The week’s most closely watched economic report is likely to be Friday’s initial estimate of second-quarter U.S. growth. In the wake of better-than-expected retail sales in June, analysts expect the report to show that GDP expanded at an annual rate of around 2.0%, down from the first quarter’s 3.1% figure.

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