John Hancock: Weekly Market Recap Week Ended July 22nd

Weak results

With the earnings season now more than 20% completed, the proportion of S&P 500 companies that are beating analysts’ earnings expectations is smaller than usual. About 68% had exceeded net income expectations as of Friday, trailing the five-year average of 77%, according to FactSet.

Bond price rally

Prices of U.S. government debt surged on Thursday and Friday, sending yields sharply lower for the week. The yield of the 10-year U.S. Treasury bond fell to around 2.78% on Friday, down from a recent high of 3.48% on June 14. The yield curve remained inverted, with the 2-year note’s yield exceeding that of the 10-year bond.

Labor market setback

The number of Americans submitting initial claims for unemployment benefits climbed to 251,000, rising for the third week in a row to the highest level in eight months. This closely watched job market health indicator signals a slowing U.S. economy.

How high?

The U.S. Federal Reserve is widely expected to approve another big interest-rate increase at Wednesday’s U.S. policy meeting. In June, the Fed lifted its short-term target range by three-quarters of a percentage point— the biggest hike since 1994—and a similar steep increase is expected heading into this week’s meeting, with some economists expecting rates will go up a full percentage point.

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