Insights

Sign up to receive exclusive financial insights:

Close

Weekly Updates

Stocks Slip with New Inflation and Q2 Earnings Data

Weekly Update – July 15, 2022

  • The S&P 500 index slipped 0.9% last week amid higher-than-expected June inflation figures and a disappointing initial round of Q2 earnings reports, although better-than-expected June retail sales data helped minimize stocks’ overall decline.
  • The market benchmark ended Friday’s session at 3,863.16, down from last Friday’s closing level of 3,899.38. The index is still in positive territory for July with a month-to-date gain of 2.1%, but it is down 19% for the year to date.
  • US stocks fell as inflation data showed US consumer prices as well as producer prices rose faster than expected in June while the first round of earnings reports for Q2 added to investors’ concerns about the economy.
  • The US seasonally adjusted consumer price index, a measure of inflation, rose by 1.3% in June, ahead of expectations for a 1.1% increase and following a gain of 1% in May, according to data released Wednesday by the Bureau of Labor Statistics. The year-over-year rate for overall CPI accelerated to a record 9.1% from 8.6% in May, while the rate for core CPI slowed modestly to 5.9% from 6%.
  • The US producer price index jumped 11.3% in June from a year earlier following May’s revised growth of 10.9%, the Bureau of Labor Statistics reported Thursday. The consensus on Econoday was for a 10.4% gain.
  • Meanwhile, among the first Q2 earnings reports, JPMorgan Chase (JPM) posted a decline in second-quarter earnings that missed analysts’ estimates as the lender set aside more cash to cover for potential loan losses and suspended its share repurchase program. Morgan Stanley (MS) also reported lower second-quarter earnings as the company said its investment banking segment was hurt by “the uncertain macroeconomic environment.”
  • However, the week’s decline was pared on Friday as stocks rose after June retail sales data showed US retail sales increased slightly more than expected in June. The retail sales increase for last month was 1%, a bit better than the Econoday consensus estimate for a 0.9% increase. Excluding autos and gas, retail sales rose 0.7%, compared with a 0.2% fall expected by Wall Street.
  • All but one sector of the S&P 500 fell last week. Communication services had the largest weekly percentage drop, falling 3.3%, followed by a 3.1% slide in energy. Among the others in the red, the materials, industrials and consumer discretionary sectors all logged declines of more than 1% each. The lone gainer was consumer staples, which edged up 0.1%.
  • The decliners in communication services included shares of Facebook parent Meta Platforms (META), which fell 3.6% amid several negative analysts’ actions. Among them, Needham downgraded its investment rating on the stock to underperform from hold, while analysts at Stifel, Citigroup and KGI Securities all lowered their price targets on the shares.
  • The energy sector’s drop came as crude-oil futures fell. Among the decliners, shares of EOG Resources (EOG) shed 7.8% and APA Corp. (APA) lost 8.2%.
  • On the upside, the gainers in consumer staples included shares of Clorox (CLX), which climbed 5.2% as the manufacturer of consumer and professional products increased its quarterly dividend by 2%.
  • Next week, the Q2 earnings reporting season will kick into a higher gear, with results expected from a long list of companies including Bank of America (BAC), Goldman Sachs Group (GS), Hasbro (HAS), Halliburton (HAL), Johnson & Johnson (JNJ), Netflix (NFLX), CSX Corp. (CSX), United Airlines Holdings (UAL), AT&T (T), Verizon Communications (VZ), Twitter (TWTR) and American Express (AXP).
  • Economic reports due next week will feature housing data in the earlier part of the week, including the NAHB/Wells Fargo Housing Market Index for July on Monday, June building permits and housing starts on Tuesday, and June existing home sales on Wednesday. Weekly jobless claims and the July Philadelphia Fed manufacturing index are expected Thursday, followed by S&P Global’s July purchasing managers’ indexes for the US manufacturing and services sectors on Friday.
  Back to Insights Page