Company / Analytics

Week 28 in Brief

• U.S. stocks fell on Friday to end a three-week winning streak as data showed consumer sentiment dwindled in early July driven by concerns of high inflation and mixed corporate earnings reports.
• Shares of cyclical groups like financials and energy companies lagged the broader market this week, while the Russell 2000 index of small companies registered its worst week since October (dropping 5.1%).
• Shares of Charles Schwab, GameStop, Didi Global, and Intel were in focus Friday following various news.
• In Europe, stocks closed lower as investors monitored economic data, corporate earnings, and the spread of the delta Covid-19 variant.
• Data showed Euro zone inflation slowed in June, with consumer prices rising 1.9% annually after a 2% climb in May, marking the first slowdown since September 2020.
• In commodities, oil ended the week lower, gold prices dipped while Treasuries continued to rally.
• In currencies, the US dollar was headed for its best weekly gain in about a month; the euro slid while the yen rose against the USD.

North America

U.S. stocks fell on Friday to end a three-week winning streak as data showed consumer sentiment dwindled in early July, driven by concerns of high inflation and mixed corporate earnings reports.

How did the major indices perform?

• In the US, the Dow Jones Industrial Average retreated 299.17 points, or 0.9%, to 34687.85, with losses accelerating later in the trading session.
• The S&P 500 lost 32.87 points, or 0.8%, to 4327.16.
• The Nasdaq Composite lost 115.90 points, or 0.8%, to 14427.24.
• All three major indexes notched weekly losses. The S&P 500 and Dow shed 1% and 0.5%, respectively. The Nasdaq fell 1.9%.
• The small-capitalization Russell 2000 index dropped 5.1% for the week in its third straight weekly loss.

What drove the market?

• The week has been marked by several choppy sessions of trading as investors parsed a higher-than-expected inflation reading on Tuesday, comments from Federal Reserve Chair Jerome Powell, and economic data on Friday.
• Shares of cyclical groups like financials and energy companies lagged behind the broader market this week, while the Russell 2000 index of small companies dropped 5.1%, its worst week since October. Meanwhile, Treasurys have continued to rally.
• Fed Comments: Federal Reserve Chairman Jerome Powell this week again reassured markets that a rise inflation was likely to be temporary, but higher prices may be behind the fall in consumer sentiment.
• Corporate earnings: A good start to second-quarter earnings reports and strong June retail sales were overshadowed on Friday by evidence of flagging consumer sentiment, analysts said. Investors have also been digesting what has been mostly upbeat second-quarter corporate earnings results but the data has been mixed and market participants are growing increasingly unsure about the post-COVID outlook.
• Economic data: A preliminary reading of the University of Michigan’s index of consumer sentiment fell to 80.8 in July from a final reading of 85.5 in June, notching the measure’s lowest level since February. Economists expected a reading of 86.3, according to a survey by the Wall Street Journal. The survey shows that consumers are preparing for a 4.8% increase in the cost of living this year, the highest level since 2008.
• Meanwhile, sales at U.S. retailers increased 0.6% last month, compared with a forecast for a 0.4% decline. Excluding autos, retail sales advanced 1.3%, almost three times as much as Wall Street expected.
• Coronavirus Spread: The spread of the more transmissible delta coronavirus variant has fueled jitters on Wall Street, but the path of least resistance continues to be higher for stocks and lower for Treasury yields, with the 10-year benchmark briefly slipping below 1.30% on Thursday.

Which stocks were in focus Friday?

• Shares of Charles Schwab Corp fell 2.4% after the company reported second-quarter earnings Friday that showed profit falling below estimates, while revenue beat, as it opened 1.7 million new brokerage accounts, exceeding 1 million for a third straight quarter.
• Shares of GameStop Corp. rose 1.3% Friday, to extend a bounce that started late in the previous session and kept them on track to snap a five-day losing streak.
• Kansas City Southern said Friday it swung to a second-quarter net loss, as a result of more than $700 million in merger costs, while also reporting an adjusted profit and revenue that came up short of expectations. Shares were down 1.1%.
• Bristol-Myers Squibb said Friday a late-stage study of a treatment for head and neck cancer failed to meet its main goals. Shares dipped 0.2%.
• U.S.-listed Chinese ride-hailing company Didi Global tumbled 3.2% after state security and police officials were sent to the company’s offices Friday as part of a cybersecurity investigation, AP reported.
• Intel was in focus after The Wall Street Journal reported that the semiconductor giant was exploring a deal to acquire chipmaker GlobalFoundries for around $30 billion. Shares of Intel slipped 1.5%.

How did the European markets perform?

• European stocks closed lower on Friday as investors monitored economic data, corporate earnings, and the spread of the delta Covid-19 variant.
• The pan-European Stoxx 600 ended the session down 0.3%, with miners tumbling 2.8% to lead losses as the majority of sectors and major bourses finished in the red. The benchmark was down about 0.7% on the week, having hit a record high on Monday.
• The DAX is higher by 0.06%, while the CAC 40 is leading the FTSE 100 lower. They are down 0.43% and 0.07% respectively.
• Data showed Euro zone inflation slowed in June, with consumer prices rising 1.9% annually after a 2% climb in May, marking the first slowdown since September 2020.
• At the top of the European benchmark, SoftBank-backed Swedish cloud computing firm Sinch surged 14.6% after a robust earnings report.
• Swedbank rose 2.5% after it reported a better-than-expected profit amid a booming mortgage market and record levels of commission income.
• Ericsson shares plunged 9.4% to the bottom of the Stoxx 600 Friday as a decline in sales in mainland China led the Swedish telecoms giant to deliver core earnings slightly below market estimates.
• Cartier maker Richemont slipped 1.3% even as quarterly constant-currency sales more than doubled, lifted by a strong performance in the Americas from its jewelry brands.
• UK-listed miner Rio Tinto fell 1.6% after reporting a 12% fall in quarterly iron ore shipments after storms affected its West Australian operations.
• UK luxury group Burberry and German sportswear company Puma also fell despite strong sales numbers.

How did Asian markets perform?

• In Asia, the Shanghai Composite fell 0.7% but booked a 0.4% weekly gain, the Hang Seng Index advanced 0.03% but logged a 2.4% weekly rise, and Japan’s Nikkei 225 closed 1% lower but notched a 0.2% gain for the week.
• The Asian weakness was in large part driven by lackluster earnings from TSMC, Asia’s biggest firm by market capitalization outside China, which saw its shares fall 4.1%.

Commodities and other assets

• Oil ended the week lower, sapped in volatile trade by expectations of growing supplies just when a rise in coronavirus cases could lead to lockdown restrictions and depress demand.
• Brent crude settled down 12 cents at $73.59 a barrel. U.S. crude rose 16 cents to end at $71.81 a barrel.
• Gold prices dipped as a stronger dollar dulled bullion’s appeal. U.S. gold futures settled 0.8% lower at $1,815 an ounce.
• The yield on the 10-year Treasury note rose less than one basis point to settle at 1.30% Friday, down 5.4 basis points for the week. Yields and bond prices move in opposite directions.

Currencies

• The US dollar was headed for its best weekly gain in about a month, and the ICE U.S. Dollar Index rose 0.10% to 92.675.
• The euro slid 0.02% at $1.1810, while the yen rose 0.17% at $110.0500.

Next Week

Earnings season kicks into a higher gear, with reports from a diverse group of companies including airlines, railroads, and household names like Coca-Cola, Johnson & Johnson, and Netflix.