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S&P Manages Small Climb, with Real Estate and Consumer Discretionary Gains and Energy Decline

Weekly Update – July 09, 2021

  • The S&P 500 index managed to climb 0.4% last week to a fresh closing high at the conclusion of a short but turbulent week for US stocks.
  • The market benchmark ended Friday’s session at 4,369.55, up from last Friday’s closing level of 4,352.34, which had also been a record closing high at the time. It reached a new intraday high Friday at 4,371.60.
  • The week began quietly, with the US stock market closed Monday following the Independence Day holiday, but was marked by sharp moves later in the week. It reached a then-new closing high on Wednesday at 4,358.13 but tumbled Thursday after the Labor Department’s report of weekly jobless claims showed a surprise increase that sparked concerns about the strength of the US economic recovery. However, investors came in Friday to “buy the dip” and ultimately sent the index up to more fresh records.
  • The activity came at a time of market suspense ahead of Q2 earnings reports, which will begin kicking off next week with reports from heavyweights including JPMorgan Chase (JPM), Goldman Sachs (GS) and Alcoa (AA).
  • The real estate sector had the largest percentage gain of the week, up 2.6%, followed by a 1.4% rise in consumer discretionary. Other gainers included utilities, technology, health care and consumer staples.
  • On the downside, the energy sector had the sharpest percentage drop of the week, down 3.4%, followed by a 0.6% slip in financials and a 0.4% decline in communication services.
  • The real estate sector’s gainers included residential real estate investment trusts Mid-America Apartment Communities (MAA), Essex Property Trust (ESS) and AvalonBay Communities (AVB), up 5.7%, 4.7% and 4.5%, respectively, as the stocks were among six residential REITs that received price target boosts from RBC Capital Markets. In raising its price targets on the stocks, RBC cited lower capitalization rates and higher estimates for core funds from operations.
  • The energy sector’s tumble came as crude oil futures fell on the week amid worries that COVID-19 Delta variant could crimp demand while investors were also concerned that a collapse of OPEC+ negotiations could spur another fight for market share.
  • The energy sector’s decliners included Diamondback Energy (FANG), whose shares fell 8.8% on the week even as Wells Fargo raised its price target on the stock to $101 from $90.
  • In the financial sector, shares of Lincoln Financial Group (LNC) shed 3.5% on the week as Piper Sandler and Autonomous Research cut their price targets on the shares of the provider of retirement, insurance and wealth protection services. The company began exchange offers and consent solicitations for outstanding capital securities.
  • Next week’s Q2 earnings calendar will feature reports from JPMorgan Chase and Goldman Sachs on Tuesday, Bank of America (BAC) and Delta Air Lines (DAL) on Wednesday, and Morgan Stanley (MS) and Alcoa (AA) on Thursday, among others.
  • On the economic calendar, the market will be looking at inflation data with the June consumer price index due Tuesday and the June producer price index due Wednesday. Weekly jobless claims on Thursday will also be in focus, especially after last week’s negative surprise, while June retail sales and July consumer sentiment will come Friday.
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