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S&P Sees Mixed Results as Second Quarter Results and Economic Data are Reported

Weekly Update – July 31, 2020

  • The S&P 500 index rose 1.7% last week, ending the month of July on a positive note as better-than-expected earnings in technology, real estate, consumer discretionary and communication services helped outweigh data showing Q2 had the largest-recorded contraction in gross domestic product.
  • The S&P 500 ended the week at 3,271.12, up from last week’s closing level of 3,215.63. This put the index’s gain for the month of July at 5.5%. It is now up 1.25% for the year to date.
  • The recent gains have come as many companies have been reporting Q2 earnings results above analysts’ expectations despite a persistent increase in COVID-19 cases. While economic data released Thursday showed the US economy contracted at a record 32.9% rate last quarter and weekly jobless claims are on the rise thanks to the pandemic, earnings reports from companies including heavyweights Apple (AAPL), Facebook (FB) and Amazon.com (AMZN) have shown some companies are benefiting from increased demand for their products and services in the pandemic.
  • By sector, technology recorded the largest percentage gain this week, up 5.0%, followed by a 4.2% increase in real estate, a 2.3% rise in communication services and a 1.1% boost in consumer discretionary. Four sectors were in the red for the week, led by energy, down 4.0%, and materials, down 1.8%.
  • On the downside, the drop in energy came as crude-oil futures fell this week amid continued worries about the pandemic’s negative impact on demand. The sector’s decliners included National Oilwell Varco (NOV), whose shares fell 9.7% on the week amid the company’s report of a wider-than-expected Q2 loss and lower-than-expected revenue.
  • Next week, all eyes will be on the Labor Department’s Friday release of July employment data. Leading up to that report, investors will get July readings on manufacturing in addition to data on June construction spending Monday. Other economic reports to come next week include June factory orders due Tuesday and July readings on the services sector due Wednesday.d between the US and China while investors continued to worry about the effects of the COVID-19 pandemic.
  • The market benchmark ended the week at 3,215.63, up from last week’s closing level of 3,224.73. As of Thursday’s close, the index had been on track to extend its run of weekly gains to a fourth week, but a 0.6% Friday drop in the S&P 500 put the index into the red for the week. The S&P 500 is still up 3.7% for the month of July but down 0.5% for the year to date.
  • Friday’s drop came as the US shut down the Chinese consulate in Houston and China ordered the US consulate in Chengdu to be closed. The closures are the latest step in the countries’ ongoing clash over issues including trade and the coronavirus pandemic.

CPWM Weekly Market Monitor (2020.07.31)

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