John Hancock: Weekly Market Recap Week Ended July 9th

Earnings optimism

Entering earnings season, Wall Street analysts are expecting the biggest quarterly earnings growth rate in a decade, according to FactSet. As of Friday, second-quarter earnings for companies in the S&P 500 were forecast to jump an average of 69%ꟷin part owing to a favorable comparison relative to the depressed earnings from last year’s second quarter amid the pandemic. 

Bond price rally

A recent trend of rising U.S. government bond prices accelerated, sending the yield of the 10-year U.S. Treasury bond below 1.30% in intraday trading on Thursday—the lowest in nearly five months. As recently as late March, the yield was 1.74%.

Price check

A government report scheduled to be released on Tuesday will show whether a monthly spike in prices in May carried over into June. The Consumer Price Index report released last month showed that prices surged 5.0% for the 12-month period that ended in May—the most in any 12-month period since 2008.

Small-cap slump

An index of U.S. small-cap stocks lagged its large-cap counterpart by a wide margin for the third week in a row, erasing small caps’ year-to-date performance edge. From June 11 through Friday’s close, the Russell 2000 Index has declined 2.3% versus a 2.7% gain for the large-cap Russell 1000 Index.