The temperatures in Alabama weren’t the only thing that was hot during the month of July. All of the major equity indexes were higher by around 7% for this past month, the biggest month investors have enjoyed since a year ago. Investors flip-flopped throughout July, buying stocks on strong earnings reports and then subsequently selling on weaker-than-expected economic numbers. For the sizzling month, the Dow rose 7.1 percent, its best showing since it rose 7.8 percent in July 2009. Meanwhile, both the S&P 500 and the Nasdaq Composite managed to tack on 6.9% in July, with the S&P 500 now resting just above the key 1,100 level. The Russell 2000 index of smaller-cap stocks moved higher by 6.8% for the month
However, stock prices lost momentum the last week of the month and were basically flat, after government data showed that economic growth had slowed to 2.4% last quarter from 3.7% earlier this year, and 5% at the end of 2009.The Dow Jones Industrial Average ended last week up 0.4%, to 10,466. The Standard & Poor’s 500 lost a point or 0.1% while the Nasdaq Composite Index fell 0.7%, to 2,255, and the Russell 2000 was flat. On a year-to-date basis, the Dow Jones Industrial Average is now slightly higher by 0.36% while the S&P 500 and the Nasdaq Composite are still to the negative, -1.21% and -0.64% respectively. The Russell 2000 continues to lead the major indexes, as it is in the black by 4.08%. July’s gains were fueled mainly by the fact that over 70% through the second earnings season, profits look to have grown 42% and profit margins are hitting nearly 10% which is a record, according to Standard & Poor’s. On the flip side, trading volumes have been extremely thing, hitting the daily turnover average just twice during the month. In addition, a robust economic recovery remains far from certain, with persistently high unemployment crimping consumption.
Investors will be looking forward to this week’s broad mix of earnings and macroeconomic releases. On Monday, the Department of Commerce releases its June construction spending report, which is expected to show a drop of 1%. Tuesday brings June personal income and spending reports which are slated to demonstrate milder growth of 0.2% and 0.1%, respectively. Wednesday kicks off with the first of a series of July jobs data, as the ADP employment report offers a look at private sector job growth.
Economists are looking for 30,000 jobs to be added to private sector payrolls, after growth of 13,000 in June, according to Briefing.com. By the end of the week, the labor market will dominate the spotlight. The Labor Department will give its weekly read on initial weekly jobless claims on Thursday before its much-anticipated July employment report on Friday. Economists expect the economy lost 116,000 non-farm payrolls in the month while the unemployment rate is expected to rise to 9.6% from 9.5% previously.
Sources: Barron’s, The Wall Street Journal, CNN, The New York Times, The Financial Times, Bespoke Investment Group, Econoday
Audrea attended the University of Alabama in Tuscaloosa, where she majored in one of the first approved financial planning programs taught at the University level. In 1998 Audrea graduated from The University of Alabama in Tuscaloosa with a Bachelor of Science degree in Family Consumer Sciences & Financial Planning. Audrea has over 19 years of experience as a Financial Advisor with Money Management Services. She holds the designations of AIF® (Accredited Investment Fiduciary), CRPS (Chartered Retirement Plan Specialist) & CES™ (Certified Estate and Trust Specialist). As an advisor, Audrea specialized in comprehensive financial planning, estate tax planning, personal taxation planning, retirement income distribution planning, wealth accumulation, personalized portfolio management, and fiduciary investment management services.