Hello, I’m Greg Curvall, Senior Portfolio Manager with Fifth Third Bank.
Last week the DJIA and S&P 500 both recorded modest gains, while the NASDAQ finished with a slight loss. The yield on the U.S. 10-year Treasury dropped to 1.28% for the week. The U.S dollar slipped and oil declined.
The second quarter earnings season has continued to surprise to the upside, with just under 90 percent of companies who have reported thus far, beating estimates.
Last week we received competing data on inflation. The Consumer Price Index showed a slowing of inflationary pressures, even as year-over-year gains remain elevated at 5.4 percent. At the same time, the producer price index showed a 7.8 percent annual increase in wholesale prices, half a percent higher than expected.
The spread of the Delta variant looks to be the next big hurdle for risk assets, though the SP 500 and DJIA are at all-time highs. The recent spike in cases has led to a re-implementation of restrictions, including mask and vaccine mandates, across the country. This is having a negative impact on sentiment.
On Friday the University of Michigan preliminary consumer sentiment index fell to its lowest level in a decade, as the Delta variant has investors questioning the strength the of the U.S. recovery.
Sentiment also took a hit amongst small-business owners. U.S. small-business optimism in July erased gains seen in June primarily due to hiring difficulties and a poor outlook on future sales.
A $1 Trillion bipartisan bill passed with significant help from GOP senators. The package would be the largest upgrade to the country’s roads, bridges, airports and broadband in decades, but still needs to pass the House. The Senate also approved the framework of a $3.5 trillion budget plan that would complement the infrastructure bill, addressing education, healthcare, climate change and many other areas.
Just weeks before the U.S. is scheduled to end its two-decade war in Afghanistan, the Biden administration is sending around 3,000 U.S. troops to Kabul to evacuate more diplomats as the speed of the Taliban’s advance has caught the administration off guard.
This week’s economic calendar is on the lighter side. On Tuesday, we get Retail Sales and Industrial Production. The rest of the week has a lot of housing data, including Building Permits and Housing Starts, along with the Philadelphia Fed Outlook and the Leading Economic Index on Thursday.
As always, will be watching and reporting back to you next week. Thank you.
