Weekend Update, July 29th, 2024

Index, Sector & Asset Performance

The S&P 500 fell about -0.9% last week and had its first -2% daily drop since February 2023. The Nasdaq suffered its worst day of 2024, with the index declining by more than -3% for the first time in more than 400 trading days. The Nasdaq could close down in July for the first time since 2007. The S&P 500 information technology sector has dropped by over -7% in two weeks. The value biased Dow index climbed +0.8%. Equal weighted indexes outperformed market cap weighted ones. The Russell 2000 continued to gain absolute and relative ground versus the S&P 500 index. Wednesday’s large drop was mostly driven by technology stocks. While Alphabet (GOOGL) earnings beat, concerning over slowing growth and increased spending hit the stock.

Weekly S&P 500 sector performance was led hiring by “boring”, “GARP” stocks with higher growth stocks lagging: Consumer Staples +0.6%. Utilities +1.5%. Financials +1.3%. Telecom -3.8%. Healthcare +1.4%. Industrials +1.1%. Information Technology -2.4%. Materials +1.4%. Energy -0.2%. Consumer Discretionary -2.3%. Real Estate +0.5%.

Following pressure from senior Democrats, President Biden abandoned his re-election bid. Vice President Kamala Harris seems to be the party’s new presidential nominee. It only took her days to gain support of all major Democrats, including former President Barack Obama and Michelle Obama, as well as party leaders in Congress.

Economic Indicators and Earnings Commentary

Earnings have been decent; 40% of the S&P 500 companies have now reported. 80% have beaten EPS estimates, 59% topped sales estimates.

Consensus expectations for S&P 500 earnings have risen to +9.5% year-over-year in 2Q24, the fourth consecutive quarterly increase and the fastest pace since 4Q21.

Investors have a busy week. Over 1/3rd of the names and 40% of the market cap of the S&P 500 index reports earnings this week and the Federal Reserve meets mid-week. Technology sector leaders Microsoft (MSFT), Meta Platforms (META), Apple (AAPL), and Amazon (AMZN) all report earnings. Other major companies that will be announcing earnings include Intel (INTC), McDonald’s (MCD), Merck (MRK), and Exxon Mobil (XOM). The Federal Reserve is widely anticipated to hold the federal funds rate steady, but guide toward easing later in the year. Fed Fund futures have priced in a 100% probability that the Fed will cut interest rates in September.

Global Market Trends/Commodities/Currencies

Global equity markets fell last week ex-Europe, led by declines in Japan and Asia.

Currency markets were turbulent led by the Japanese Yen carry trade unwinding. Gold and Bitcoun continue to shine while most other commodities wilt.

OHFG Exclusive Data & Charts

Oak Harvest Weekly Stock Talk: Harry Dent, Robert Kiyosaki, Robert Prechter, and Jeremy Grantham – Why Boomer Love Doomers?