Stocks Mixed on Earnings and Weak Economic Data

Good morning!

The Dow (+0.7%), NASDAQ (-2.1%), and S&P 500 (-0.8%) were mixed for the week.  Meanwhile taxable bonds were up 0.3% and tax-free municipal bonds were up 0.1%.  The 10-year Treasury yield fell 0.04% to finish the week at 4.20%.

Disappointing earnings reports from two key technology stocks (discussed below) also came while economic data was reported to be weak.  Specifically, existing home sales fell 5.4% year over year, resulting in the highest supply of homes on the market since the teeth of COVID in May 2020.  Similarly, durable goods orders fell a surprising 6.6%, compared to an expected gain of 0.3%.  That was the largest drop in durable goods orders since April 2020, also during the peak of the COVID outbreak.  Lastly, the Fed-favored measure of inflation (PCE – Personal Consumption Expenditures) remained roughly flat at 2.6%.  All this data gives fuel for the Fed to consider cutting interest rates, which many pundits believe will occur at their September meeting.

Technology stocks tumbled last week, as two of the “Magnificent 7” artificial intelligence (AI) stocks – Google and Tesla – reported disappointing quarterly earnings.  Those earnings reports caused those two stocks to fall 6% and 8%, respectively, dragging the entire technology sector down with it, as evidenced by the NASDAQ’s drop of 2.1%.  This week will feature earnings reports for three more prominent tech stocks – Microsoft, Meta, and Apple.  Microsoft and Apple represent two of the three largest companies in the world, with market caps around 3 trillion dollars.

Have a great day and terrific week!

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.} 

^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}