John Hancock: Weekly Market Recap Week Ended July 18

Solid earnings start

Earnings from the first three major U.S. banks to report second-quarter results exceeded analysts’ expectations owing in part to a surge in investment banking income. As of Friday, analysts were forecasting that financials sector earnings rose 8.6%—above the 5.6% growth forecast across all sectors in the S&P 500, according to FactSet.

Retail rebound

U.S. retail sales posted a bigger-than-expected rise after falling sharply the previous month, as sales climbed 0.6% in June following a 0.9% decline in May. Retail sales figures aren’t adjusted for inflation, so June’s sales increase could be partly attributed to price increases amid elevated tariffs.

Sentiment uptick

A gauge of U.S. consumer sentiment rose slightly relative to the previous month’s reading although it remained well below a recent peak reached last December. Friday’s preliminary monthly report from the University of Michigan Index of Consumer Sentiment also showed a recent decrease in consumers’ inflation expectations.

Rate cut outlook

Bond market trading on Friday continued to support expectations that the U.S. Federal Reserve is unlikely to cut interest rates at its two-day meeting ending July 30. Prices in interest rate futures markets implied that most investors were expecting two quarter-point rate cuts by year end, with the first cut expected at the Fed’s mid-September meeting, according to CME Group’s FedWatch tool.

SOURCE: https://www.jhinvestments.com/weekly-market-recap#market-moving-news