Category Archives: Daily Insights

Market Insights 7/22/2019

U.S. equities posted modest gains to begin the week amid a dormant economic calendar as investors look ahead to a week that will be chock full of potential market-moving events including Q2 earnings season as well as Robert Mueller’s testimony on capital hill.

Treasury yields were little changed, the U.S. dollar inched higher, crude oil prices were mixed, and gold nudged lower.

The Markets…

The Dow Jones Industrial Average rose 18 points (0.1%) to 27,172

The S&P 500 Index gained 8 points (0.3%) to 2,985

The Nasdaq Composite increased 58 points (0.7%) to 8,204

In moderate volume, 717 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil added $0.46 to $56.22 per barrel and wholesale gasoline was down $0.01 at $1.83 per gallon

The Bloomberg gold spot price ticked $0.63 lower to $1,424.74 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.1% to 97.28

Treasury yields finish unchanged as busy week begins

Treasuries finished unchanged amid an economic calendar void of any major releases today, as the yields on the 2-year and 10-year notes, along with the 30-year bond, were flat at 1.82%, 2.05% and 2.57%, respectively.

The global markets continue to grapple with lingering expectations that the Fed will announce a rate cut at the end of the month, amid the backdrop of mixed economic data, festering trade uncertainty and a heating up earnings season. As U.S. stock indexes reached new highs we are concerned that the potential good news is already mostly reflected, while the potential bad news is being largely ignored.

Earnings season started with reduced expectations, leading to the possibility of upside surprises. Meanwhile, the Fed seems likely to cut rates, but the impact may be diminished, while recent economic data shows reason for concern. Earnings, especially for financial companies, could differ between the United States and international regions due to diverging global central bank actions.

Europe mixed ahead of ECB decision, Asia lower

European equities were mixed, with the energy sector getting a boost from an advance in crude oil prices as tensions in the Middle East heat up, while the markets looked to tread a bit cautiously ahead of this week’s monetary policy decision from the European Central Bank (ECB). The ECB’s decision will come ahead of the July 31st decision from the Fed in the U.S., at which it is expected to announce a rate cut. The British pound dipped versus the U.S. dollar, with voting for the U.K. Prime Minister set to close later today and a winner expected to be announced tomorrow. The euro was little changed and bond yields in the region were mixed.

Stocks in Asia finished lower, despite reports suggesting U.S.-China trade talks could restart, while the global markets await this week’s monetary policy meeting from the European Central Bank, which will precede the July 31st decision from the Fed in the U.S.

Stocks in Japan declined, with losses likely being limited by some weakness in the yen, as the weekend’s results of the nation’s election were eyed. Japanese Prime Minister Abe’s ruling coalition won a majority in the upper house of Parliament but fell short of gaining a supermajority. Mainland Chinese equities and those traded in Hong dropped, with the opening of the country’s Nasdaq-style equity markets garnering attention.

Random Thoughts

Investor optimism has been supported by a better-than-expected start to the Q2 EPS reporting season, as well as the ongoing possibility of a rate cut by the end of the month.

S&P 500’s Q2 EPS growth is now projected to be off just 0.2%, according to S&P Capital IQ consensus earnings estimates, after being down 2.0% a week earlier.

The lifting of spirits was assisted by the financials sector in general and the banking industry in particular. Specifically, the S&P 1500 financials sector saw a 1.2% improvement in Q2 EPS growth estimates as of 7/19 versus the estimate as of the end of the quarter, aided by 6.6% increase in EPS forecasts by the diversified banking group. Yet that sub-industry’s gain wasn’t the highest in EPS reassessments.

Of non-REIT sub-industries in the S&P 1500, systems software (+9.6%), reinsurance (+8.0%) and multi-sector holdings (+7.6%) recorded superior adjustments. In all, 42% of the 146 sub-industries in the S&P 1500 saw flat-to-higher Q2 EPS growth estimates.

Not all groups fared as well, as 58% saw lowered revisions with aluminum (-32.8%), forest products (-16.1%), integrated oil & gas (-14.8%) and gold (-13.7%) faring the worst. And with the S&P 500 now approaching a positive performance in Q2, it appears as if the “500” stands a good chance of recording its 30th consecutive quarter in which actual results exceeded end-of-quarter estimates.

Yet to be determined is whether the EPS recession has been postponed or cancelled, since the S&P 500’s Q3 EPS projections have slipped to a decline of 1.1% from an earlier estimated shortfall of 0.2%.

In addition, seven of its 11 sectors have seen reductions to their Q3 estimates, while the market’s full-year results eased to a gain of 1.7% from a previously forecasted advance of 1.9%.

Market Insights 7/19/2019

U.S. equities finished lower in another bumpy trading session, as re-energized near-term rate cut expectations came up against a mixed bag of earnings and economic news, as well as elevated geopolitical tensions following Iran’s seizure of a U.K. tanker.

Treasury yields and the U.S. dollar were higher following a slight increase in consumer sentiment, while crude oil prices were modestly higher and gold tumbled.

The Markets…

The Dow Jones Industrial Average fell 69 points (0.3%) to 27,154

The S&P 500 Index shed 19 points (0.6%) to 2,977

The Nasdaq Composite decreased 61 points (0.7%) to 8,147

In moderate volume, 802 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil added $0.42 to $55.76 per barrel and wholesale gasoline was up $0.01 at $1.84 per gallon

The Bloomberg gold spot price tumbled $20.79 to $1,425.31 per ounce and continued a rally, breaking out of a key technical level to reach highs not seen since 2013.

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.4% to 97.17

Markets were lower for the week, as the DJIA decreased 0.7%, while the S&P 500 Index and the Nasdaq Composite lost 1.2%

July consumer sentiment ticks higher, modestly misses estimates

The July preliminary University of Michigan Consumer Sentiment Index nudged higher to 98.4 from June’s read of 98.2, but slightly below the 98.8 Bloomberg expectation. A dip in the current conditions component of the index was offset by a rise in the index of consumer expectations. The 1-year inflation forecast dipped to 2.6% from 2.7%, but the 5-10 year inflation forecast rose to 2.6% from the previous 2.3% rate.

Next week is poised to offer another robust slate of potential market-moving data, with earnings season continuing to kick into high gear and the economic calendar chock full of reports to digest leading up to the July 31st Fed monetary policy decision. Existing and new home sales will give reads on the housing sector, Markit will deliver timely looks at manufacturing and services sector activity, durable goods orders will show demand for goods meant to last three years or more, and we will get the first look (of three) at Q2 GDP.

Treasuries were lower, as the yield on the 2-year note rose 3 basis points to 1.81%, while the yields on the 10-year note and the 30-year bond ticked 1 basis point higher to 2.05% and 2.57%, respectively.

Europe mixed, Asia higher on Fed rate cut hopes and data

European equities finished mixed, with expectations of an imminent rate cut out of the U.S. continuing to climb on the heels of commentary from Fed officials yesterday. The euro and British pound lost ground as the U.S. dollar found support despite the comments, while bond yields in the region were mostly lower. Italian political uncertainty has also increased, which pressured stocks in the nation.

Stocks in Asia finished mostly higher, with earnings season rolling on and coming in mostly better than expected, while U.S. rate cut expectations were supported by commentary from some Fed officials that suggested the Central Bank should act quickly to counter slowing economic activity and trade concerns.

Japanese equities rallied, with the yen giving back some recent gains, while the nation’s consumer price inflation rose in line with expectations for June. Stocks in mainland China and Hong Kong advanced, while markets in Australia moved higher, led by the materials and financials sectors, and South Korean securities increased on the heels of yesterday’s unexpected rate cut from the Bank of Korea.

Stocks slip slightly from record high territory amid flood of data, trade and Fed focus

U.S. stocks slightly slipped from last week’s return to unchartered territory, as earnings season heated up, trade uncertainty lingered and the markets grappled with mixed economic data and the implications for a Fed rate cut. Q2 earnings season started with a focus on the financial sector, with Dow member Goldman Sachs Group Inc highlighting the group as the Street cheered its results that included stronger-than-expected revenues from its investment banking and investing & lending units. The other major banks saw some scrutiny as net interest income came in mostly softer than expected but the results on the whole did suggest the all-important U.S. consumer remains healthy.

The transportation sector was also in focus, with United Airlines Holdings Inc continuing the string of upbeat results from the carriers, while rail companies saw mixed performance, as CSX Corporation fell after missing earnings forecasts and lowering its revenue outlook, but improved efficiency out of Union Pacific Corporation helped top profit projections to foster a rally in its shares. With 15% of the S&P 500 companies having reported thus far, about 61% have topped revenue estimates and nearly 78% have bested earnings forecasts, per data compiled by Bloomberg.

The economic front seemed to throw a wrench at elevated Fed rate cut expectations and apply some pressure to the markets, as June retail sales posted another stronger-than-expected month, July reads on regional manufacturing activity suggested a potential return to expansion, and the Fed’s Beige Book signaled that business activity across the nation continued to grow. The reports followed recent data showing inflation was a bit warm and non-farm employment growth rebounded.

However, July rate cut expectations lingered amid some late-week dovish Fed commentary and as the Index of Leading Economic Indicators declined for the first time this year and the Fed’s industrial production report came in flat.

Market Insights 7/18/2019

U.S. equities were able to finish with modest gains after a rocky session, as uncertainty was palpable amid a host of divergent earnings and economic reports, as well as continued angst over a U.S.-China trade deal.

Netflix fell sharply after disappointing with its subscriber growth, but eBay and Union Pacific saw gains after their respective results.

Treasury yields, the U.S. dollar and crude oil prices were all lower, while gold jumped.

The Markets…

The Dow Jones Industrial Average inched 3 points higher to 27,223

The S&P 500 Index was up 11 points (0.4%) to 2,995

The Nasdaq Composite gained 22 points (0.3%) to 8,207

In moderate volume, 734 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq

WTI crude oil fell $1.48 to $55.30 per barrel and wholesale gasoline was down $0.05 at $1.83 per gallon

The Bloomberg gold spot price advanced $18.23 to $1,444.80 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.6% lower at 96.69

Leading Indicators decline, jobless claims rise, regional manufacturing activity jumps

The Conference Board’s Index of Leading Economic Indicators (LEI) for June decreased 0.3% month-over-month — the first decline of the year—versus the Bloomberg projection of a 0.1% gain and compared to May’s unrevised flat reading. Positive contributions came from credit, average workweek and stock prices components of the index, but were more than offset by declines for building permits, ISM new orders and jobless claims.

Weekly initial jobless claims increased by 8,000 to 216,000, matching the Bloomberg estimate, with the prior week’s figure being revised lower by 1,000 to 208,000. The four-week moving average dipped by 250 to 218,750, while continuing claims fell by 42,000 to 1,686,000, south of estimates of 1,700,000.

The Philly Fed Manufacturing Index in July jumped to 21.8, from the 0.3 posted the month prior, well above expectations of a rise to 5.0, and moving comfortably into expansion territory (a reading above zero).

Treasuries finished higher, as the yield on the 2-year note dropped 8 basis points (bps) to 1.75%, the yield on the 10-year note declined 3 bps to 2.03%, and the 30-year bond rate declined 1 bp to 2.57%.

The only item on tomorrow’s economic calendar is the preliminary University of Michigan Consumer Sentiment Index for July, forecasted to increase to 98.7 from June’s 98.2 level.

Europe mixed, Asia lower on data and flared-up trade uncertainty

European equities were mixed, with the global markets digesting the Q2 earnings season, while U.S.-China trade uncertainty flared-up recently to apply some pressure to conviction. euro dipped versus the U.S. dollar and bond yields in the region lost ground. The British pound rose versus the greenback after U.K. retail sales for June came in stronger than expected.

Stocks in Asia finished lower with the global markets appearing to turn cautious amid resurfacing U.S.-China trade uncertainty, while scrutiny continued regarding the start to Q2 earnings season. A host of economic data was sifted through with a mixed response, as Japanese exports in June fell more than anticipated, Australian employment change was below estimates for last month, and the Bank of Korea unexpectedly cut its benchmark interest rate. Japanese equities dropped, with the yen moving higher, while markets in South Korea, mainland china, Hong Kong, Australia and India were also lower.

Market Insights 7/17/2019

U.S. equities finished lower, as investors mulled a number of earnings results and economic data.

Treasury yields and the U.S. dollar were lower, and crude oil prices lost ground, while gold finished higher.

The Dow Jones Industrial Average declined 116 points (0.4%) to 27,220

The S&P 500 Index was 20 points (0.7%) lower at 2,984

The Nasdaq Composite lost 38 points (0.5%) to 8,185

In light volume, 702 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil fell $0.84 to $56.78 per barrel and wholesale gasoline was down $0.01 at $1.88 per gallon

The Bloomberg gold spot price jumped $19.59 to $1,425.82 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 97.22

Housing construction activity misses forecasts, mortgage applications dip

Housing starts for June declined 0.9% month-over-month to an annual pace of 1,253,000 units, below the Bloomberg forecast of 1,260,000 units. May starts were revised lower to an annual pace of 1,265,000. Construction for single-unit homes rose solidly m/m but starts for multi-unit structures dropped noticeably. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, dropped 6.1% m/m to an annual rate of 1,220,000, versus expectations of a 1,300,000 pace, and compared to May’s upwardly-revised 1,299,000 rate. This was the lowest level for building permits in two years as authorizations for single-unit houses nudged higher m/m, though permits for structures of 5 units or more fell sharply.

The MBA Mortgage Application Index decreased 1.1% last week, following the prior week’s 2.4% decline. The dip came as a 1.5% gain in the Refinance Index was more than offset by a 3.8% drop for the Purchase Index. The average 30-year mortgage rate rose 8 basis points (bps) to 4.12%.

In afternoon action, the Federal Reserve delivered its Beige Book—an anecdotal look at business activity across the nation used by Fed policymakers to prepare for the next two-day monetary policy meeting set to end July 31st. The survey indicated that the economy expanded at a modest pace during the mid-May to early-July period, with retail sales up slightly and manufacturing flat. Most respondents felt mostly positive about the economic outlook, despite “widespread concerns about the possible negative impact of trade-related uncertainty.” Regarding inflation, the report showed that most districts deemed price increases as “stable to down”, while also noting that they were unable to pass along higher input prices to their customers as the marketplace competition remained “brisk”.

Treasuries were higher, as the yield on the 2-year note fell 3 bps to 1.83%, while the yields on the 10-year note and the 30-year bond decreased 7 bps to 2.05% and 2.57%, respectively.

Tomorrow’s economic calendar will included weekly initial jobless claims, forecasted to have increased 7,000 to a level of 216,000 as well as the Philly Fed Manufacturing Activity Index, expected to rise to a level of 5.0 for July from the 0.3 posted in June, with a reading above zero indicating expansion in activity, while the Index of Leading Economic Indicators (LEI) will round out the day, with economists projecting a 0.1% increase for June following the flat reading seen in May.

Europe mostly lower as earnings pour in and trade concerns flare up, Asia mixed

European equities were mostly lower, with the energy sector leading to the downside, and as investors digested some mixed earnings reports. Trade concerns also flared up after comments from U.S. President Donald Trump suggested the U.S. and China have a long way to go to reach a deal, while economic data was on the softer side.

European Union new car registrations fell in June and Eurozone construction output dipped in May, while U.K. inflation statistics came in roughly in line with expectations for June.

The euro and British pound ticked higher versus the U.S. dollar and bond yields in the region saw some pressure.

Stocks in Asia finished mixed as the markets digest earnings season, while U.S.-China trade uncertainty resurfaced after U.S. President Donald Trump said the two nations have a long way to go on trade. Mainland Chinese equities and those traded in Hong Kong dipped, while Japanese securities also traded lower, with the yen modestly trimming yesterday drop. Stocks in South Korea fell amid some weakness in the chip sector, while Australian listings gained ground, with consumer staples, financials and materials all moving to the upside.

Random Thoughts

This week, Wall Street’s attention is almost exclusively on Q2 earnings reports, which are now projected to decline 1.3%, year on year, according to Wall Street consensus estimates for the S&P 500 index.

EPS should be followed up with an additional 0.8% slip in Q3. Compared with estimates on 3/31/19, S&P 1500 sectors with the largest upward revisions to Q2 EPS growth include financials, health care and real estate.

Sub-industries with the most favorable adjustments include diversified metals & mining, diversified REITs, heavy electrical equipment, industrial REITs and specialized consumer services.

Those with the deepest reductions to Q2 estimates include the consumer discretionary, industrials and materials sectors, along with the aluminum, forest products, interactive home entertainment, leisure products and textiles sub-industries. Q2 results will likely end up in the black, however, as was the case in each of the preceding 29 quarters, which saw actual growth exceed end-of-quarter estimates by an average of 3.8 percentage points.

Market Insights 7/16/2019

U.S. equities finished modestly lower as investors scrutinized a mixed bag of earnings results from Dow members Goldman Sachs, JPMorgan Chase & Co and Johnson & Johnson, along with Wells Fargo.

Retail sales posted its fourth-straight monthly increase, bringing fed uncertainty back into focus, while industrial production was unexpectedly flat and homebuilder confidence remained strong.

Treasury yields and the U.S. dollar were higher, while crude oil prices and gold were lower.

The Markets…

The Dow Jones Industrial Average declined 24 points (0.1%) to 27,336

The S&P 500 Index was 10 points (0.3%) lower at 3,004

The Nasdaq Composite lost 35 points (0.4%) to 8,223

In light volume, 679 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq

WTI crude oil fell $1.96 to $57.62 per barrel and wholesale gasoline was down $0.04 at $1.89 per gallon

The Bloomberg gold spot price decreased $11.10 to $1,403.03 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.5% higher to 97.39

Retail sales top expectations, industrial production flat, homebuilder sentiment ticks higher

Advance retail sales for June rose 0.4% month-over-month, versus the Bloomberg forecast of a 0.2% increase, and May’s 0.5% rise was downward-revised to a 0.4% gain. Last month’s sales ex-autos also moved 0.4% higher m/m, compared to expectations of a 0.1% gain and May’s downward-revised 0.4%. Sales ex-autos and gas jumped 0.7%, compared to estimates of a 0.3% gain, and May’s unadjusted 0.5% increase. The control group, a figure used to calculate GDP, also gained 0.7%, versus projections of a 0.3% rise, and compared to May’s upwardly-revised 0.6% increase.

The Federal Reserve’s industrial production came in flat m/m in June, compared to estimates calling for a 0.1% increase, and May’s unadjusted 0.4% rise. Manufacturing and mining output both gained ground, while utilities production fell. Capacity utilization slipped to 77.9% from the prior month’s unrevised 78.1% rate, where it was forecasted to remain. Capacity utilization is 1.9 percentage points below its long-run average.

The Import Price Index fell 0.9% m/m for June, versus projections of a 0.6% decline, and following May’s upwardly-revised flat reading. Compared to last year, prices were down 2.0%, versus forecasts of a 2.3% drop and compared to May’s upwardly-revised 1.1% fall.

Treasuries were lower following the retail sales report, as the yields on the 2-year and 10-year notes, along with the 30-year bond, rose 2 bps to 1.86%, 2.12% and 2.63%, respectively.

The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in July ticked higher to 65 from June’s unrevised 64 level, where it was expected to remain, with a level of 50 separating good and poor conditions. This was the sixth-straight month the index has been north of 60. However, the NAHB pointed out that builders “continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes.”

Europe higher as earnings season in focus, Asia mixed following data

European equities were higher, as the global markets digested the mixed results in the U.S. as Q2 earnings season begins to heat up. The euro and British pound saw some pressure versus the U.S., which held onto early gains following a stronger-than-expected U.S. June retail sales report. Bond yields in the region moved lower, with German investor confidence falling more than expected for July, the U.K. employment change missing estimates for May and the Eurozone trade surplus widening more than forecasted for May.

Stocks in Asia finished mixed with the global markets paying close attention to the ramp up of earnings season in the U.S., along with yesterday’s Chinese economic data that showed Q2 GDP growth hit a 27-year low but its retail sales, industrial production and fixed asset investment all came in north of estimates.

Japanese equities declined in a return to action following yesterday’s holiday break, with the yen choppy. Shares in mainland China dipped, while those traded in Hong Kong ticked higher. Markets in Australia slipped, even as the minutes from the Reserve Bank of Australia’s July meeting, at which it cut rates to a record low, showed a willingness of the central bank to do more if needed.

Stocks in South Korea and India gained ground, with the markets in the latter assessing the implications of yesterday’s data that showed wholesale price inflation was cooler than expected and exports fell in June.

Market Insights 7/15/2019

U.S. equities finished higher, but very near the unchanged mark, with investors cautious ahead of an acceleration of Q2 earnings season with banks in focus.

Treasury yields were lower and the U.S. dollar ticked higher following a read on upbeat read on regional manufacturing activity, while crude oil prices declined and gold lost ground.

The Markets…

The Dow Jones Industrial Average rose 27 points (0.1%) to 27,359

The S&P 500 Index was unchanged at 3,014

The Nasdaq Composite added 14 points (0.2%) to 8,258

In light volume, 676 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq

WTI crude oil fell $0.63 to $59.58 per barrel and wholesale gasoline was down $0.05 at $1.93 per gallon

The Bloomberg gold spot price decreased $1.73 to $1,414.02 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—inched 0.1% higher to 96.94

Citigroup Inc. reported Q2 earnings-per-share of $1.95, or $1.83 ex-items, versus the $1.81 Wall Street estimate, with revenues rising 2.0% year-over-year to $18.8 billion, above the expected $18.5 billion. The company noted higher global consumer banking revenues and although its fixed income markets and investment banking revenues declined, they were above expectations.

Regional manufacturing activity returns to expansion to kick off the economic week

The Empire Manufacturing Index showed output from the New York region improved more than expected and returned to expansion territory (a reading above zero) for July. The index rose to 4.3 from June’s unrevised -8.6 level, with the Bloomberg forecast calling for a rise to 2.0.

Treasuries were slightly higher, as the yield on the 2-year note dipped 1 basis point (bp) to 1.82%, the yield on the 10-year note fell 2 bps to 2.09%, and the 30-year bond rate lost 3 bps to 2.60%.

As noted if the trade stalemate lingers and/or the next round of tariffs on Chinese imports kicks in, the damage to the economy is likely to escalate. The burning question remains about the sufficiency of monetary policy ammunition as an offset to weak growth. The month-long inversion of the yield curve has been adding to that angst. Absent a comprehensive trade deal, it’s difficult to imagine that executives will be confident enough to expand capital spending, which had been one of the primary rationales for 2018’s corporate tax cut.

Europe mostly higher, Asia mixed as data eyed

European equities finished mostly higher, with the global markets digesting a 27-year low in China’s Q2 GDP growth, but June reads on Chinese industrial production and retail sales both grew more than expected. The ramp up in Q2 earnings season also garnered attention with Citigroup mostly topping quarterly estimates in the U.S., while shares of Galapagos NV rallied on the additional stake in the Belgian biotechnology company from Gilead Sciences. The euro and British pound dipped versus the U.S. dollar, while bond yields in the region trimmed a recent run.

Stocks in Asia diverged, with markets in Japan closed for a holiday and the markets digesting a flood of economic data out of China that painted a mixed picture and awaited the ramp-up of earnings season in the U.S. China’s Q2 GDP growth came in at a 27-year low of 6.2% y/y, matching expectations and compared to the 6.4% pace posted in Q1. Moreover, June reads on China’s industrial production and retail sales both rose at larger amounts than anticipated. Stocks in both mainland China and Hong Kong gained slight ground.

Random Thoughts

The U.S. equity markets have had a lot to celebrate in July, particularly since both the DJIA and S&P 500 recently eclipsed millennium milestones by closing above the 27,000 and 3000 levels, respectively.

They may soon be joined by the Nasdaq-100, as it approaches the 8,000 mark. So what happens next? Will these recent gains build upon themselves, or will equities need to undergo a digestion phase? Well, if history is any guide, for it’s never gospel, the overall advance should still have further to run.

Indeed, the eclipsing of new millennium milestones since the early 1970s have implied further advances 20, 40 and 60 trading days later for both the DJIA and Nasdaq-100 (NDX) that exceeded their averages for all observations. What’s more, the likelihood of a price rise for the DJIA improved to 77% 60 days after rising above each 1000-point level for the first time, versus 64% for all periods.

For NDX, the average price changes and batting averages post-millennium marks also improved vs. all observations.

U.S. Market Weekly Summary – Week Ending 07/12/2019

S&P 500 Posts 0.8% Weekly Rise, Closes Above 3,000 for First Time

The Standard & Poor’s 500 index rose 0.8% this week to a record closing high that marked its first close above the psychologically important 3,000 level as investors prepared for the kickoff of Q2 earnings reports next week as well as the Federal Open Market Committee’s (FMOC) late-July meeting.

The market benchmark ended the week at 3,013.77, up from last Friday’s closing level of 2,990.41, and marking its first close above 3,000. It also set a fresh intraday peak during the session.

The S&P 500 first crossed above the 3,000 mark intra-day Wednesday as Federal Reserve Chairman Jerome Powell said the economic outlook hasn’t improved in recent weeks. He said risks that weak inflation could prove more persistent than previously anticipated “strengthened the case for a somewhat more accommodative policy.”

While investors had already been hopeful for the FOMC to cut interest rates at its upcoming meeting later this month, Powell’s Wednesday comments sent those hopes even higher. Still, the S&P 500 failed to close above the 3,000 mark until Friday.

The energy sector had the largest percentage gain this week, up 2.2%, as West Texas Intermediate crude oil futures rose to seven-week highs amid anticipation of a possible hurricane in the Gulf of Mexico and as Iran attempted to impede a British tanker. Also boosting oil prices, Wednesday’s weekly inventory data from the Energy Information Administration showed a larger-than-expected decrease in oil inventories for last week.

The consumer-discretionary sector had the second-largest percentage increase of the week, up 2.1%. The consumer-discretionary sector’s gainers included Amazon.com, whose shares rose 3.5% this week ahead of its Prime Day event. The advance also came as the Financial Times reported subscription growth at Amazon’s music streaming service is rising faster than at rivals Apple and Spotify.

On the downside, the health-care sector had the largest percentage drop of the week, slipping 1.4%.