Weekly Update - August 03, 2018
- Stock markets again posted mixed results for the week: U.S. indexes were mostly up but Asia and Europe were mostly down. Second-quarter earnings remained supportive, trade tensions remained a drag on sentiment. Oil prices were volatile, ending the week down, as did gold prices. The 10-year U.S. Treasury yield broke through the 3% barrier midweek but ended slightly lower for the week at about 2.95%.
- Based on Thursday’s intraday prices, analysts estimated that Apple Inc. became the first company to reach a $1 trillion market capitalization.
- With 81% of S&P 500 companies reporting second-quarter results, 80% have exceeded earnings per share expectations, while 74% have beaten sales expectations. As of August 3, 2018, FactSet estimated the S&P 500 index’s second-quarter earnings growth rate at 24.0% and its 12-month forward P/E ratio at 16.5, above the five- and ten-year averages of 16.2 and 14.4, respectively. Apple, Pandora and Procter & Gamble impressed this week, whereas Baidu, Cheesecake Factory and Lumber Liquidators disappointed.
- U.S. employers added 157,000 new jobs in July, fewer than May or June. Taking the three months together, the report showed job growth still is expanding. The unemployment rate ticked down from 4.0% last month to 3.9%, but wages rose only modestly from a year earlier in July.
- Consumer confidence climbed to 127.4 in July from a downwardly revised 126.4 in June, better than the 126.5 consensus though expectations had slipped. About four in ten respondents said jobs are “plentiful,” the highest reading since March 2001. Personal spending was up 0.4%.
- After a strong first half-year, U.S. auto sales declined in July. Analysts blamed rising interest rates, higher gasoline prices and falling demand for passenger cars.
- Chicago PMI increased to 65.5 from 64.1, above the 62.0 consensus. New orders reached a six-month high and inventories hit an 18-month low, amid more signs of input price pressures. By contrast, the ISM manufacturing index ticked lower.
- The flash Markit Eurozone Manufacturing PMI rose to 55.1 in July, above June’s final reading of 54.9. New export order growth approached a two-year low amid concerns about tariffs and trade wars.