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US Market Ends Winning Streak as Tech and Communication Slip and Energy Gains

Weekly Update – July 24, 2020

  • The S&P 500 index slipped 0.3% last week, marking the index’s first weekly drop since June, as tensions flared 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.
  • The technology sector led the week’s decliners with a drop of 1.5%, followed by a 1.0% slide in communication services. On the upside, energy led the gainers with a 2.2% jump, followed by increases of 1.3% each in consumer discretionary and financials.
  • The technology sector’s decliners included Intel (INTC), whose shares tumbled 15.7% on the week as the chipmaker reported Q2 adjusted earnings per share and revenue above analysts’ expectations but forecast Q3 adjusted EPS below the Street view and signaled a delay in its 7-nanometer-based CPU product timing.
  • In communication services, AT&T (T) shares fell 2.3% amid reported a decline in Q2 results. While the company’s adjusted EPS topped the Street view, revenue was slightly below analysts’ mean estimate, hurt by COVID-19.
  • The energy sector’s gainers included Halliburton (HAL), whose shares jumped 12.5% this week following the company’s report of better-than-expected Q2 earnings despite a revenue miss. Many Street analysts boosted their price targets on the stock following the results.
  • Also boosting the energy sector, Noble Energy (NBL) shares climbed 12.8% this week on its agreement to be acquired by Chevron (CVX) in an all-stock deal valued at about $5 billion.
  • The financial sector’s gains also came amid a number of better-than-expected earnings reports. Among them, shares of Huntington Bancshares (HBAN) rose 7.6% as the company reported Q2 earnings per share above analysts’ expectations while revenue also topped the Street view.
  • Better-than-expected earnings also boosted the consumer-discretionary sector. PulteGroup (PHM) shares jumped 14.3% on the week amid the homebuilder’s release of higher-than-expected Q2 adjusted EPS and revenue.
  • Best Buy (BBY) shares gained 10.3% as the consumer-electronics retailer said its quarter-to-date sales through July 18 increased about 2.5% in Q2 from a year earlier, driven by online sales growth of some 255%.
  • Next week, the advance report on durable goods for June is due Monday. More housing data are due Tuesday with the release of the S&P CoreLogic Case-Shiller Indices for May. Consumer confidence for July is also set to be released Tuesday.

CPWM Weekly Market Monitor (2020.07.24)

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