The Stock Market This Week: July 20-24

By: Stacey Nickens

On Monday, mega-cap stocks and a weakened dollar drove the market higher. The S&P 500 closed with a 0.7% bump, and the Dow Jones Industrial Average climbed 0.4%. The tech-heavy Nasdaq Index was up 1.7% in daily trading. A majority of the S&P 500 sectors closed with daily gains, including information technology, materials, and real estate. Only utilities and financials fell. The materials sector responded positively to climbing gold prices as well as the weakening U.S. Dollar Index. As the value of the U.S. dollar continues to decline, foreign investments will likely increase and bolster the U.S. economy. Amazon, Apple, Alphabet, and Facebook all performed strongly in advance of Amazon, Alphabet, and Facebook’s earnings reports later this week. Positive news abounded when Moderna earned increased funding for their COVID-19 vaccine candidate and the Commerce Department announced that U.S. durable goods orders increased in June.

On Tuesday, major indexes declined as Congress continued to debate the next coronavirus relief bill. The Nasdaq dropped 1.3%, the S&P declined 0.7%, and the Dow Jones slipped 0.8%. Of the major sectors, materials and energy fell behind while defensive-oriented real estate, utilities, and consumer staples climbed during Tuesday’s trading. Investors seemed wary of Wednesday’s Fed policy statement as well as Thursday’s mega-cap earnings reports. In earnings today, Pfizer reported strong results and gained 4%; however, both McDonald’s and Raytheon Technologies took a hit after less-than-stellar earnings reports. Other economic news suggested that recovery will be a bumpy road. The Consumer Confidence Index dropped in July, and the Fed chose to extend lending facilities by three months. In more positive news, the S&P Case-Shiller Home Price Index rose 3.7% in May.

On Wednesday, The S&P 500, Dow Jones, and Nasdaq all closed higher, in part due to the Fed’s latest policy announcements. The S&P 500 climbed 1.2%, with all 11 of its sectors going positive for the day. Energy and financials made the biggest gains in the market, while consumer staples made the smallest. The Nasdaq also rose 1.4%. Apple, Amazon, Alphabet, and Facebook were all up at market close. Their CEOs spent the day testifying in front of the House Judiciary Committee, and despite the legislature’s concerns about their business practices, all four maintained gains in their stocks. The Dow Jones posted a modest 0.6% in gains. One of its components, Visa, became positive after a strong earnings report. Advanced Micro Devices, Shopify, and Starbucks also rallied after positive earnings reports; however, Boeing and General Electric went negative following their reports. Boeing announced that they expected to cut 19,000 jobs due to a major hit to the travel industry. Pending home sales increased in June. Advanced retail and wholesale inventories both declined in June.

On Thursday, the S&P 500 initially dipped due to concerning economic news. The Q2 GDP dropped 32.9% on an annualized basis, and initial and continuing jobless claims both rose. The combined news stories pointed at the coronavirus’s ongoing economic impact. However, a buy-the-dip mindset took over during the day, sending mega-cap stocks from negative to positive. With this shift, the S&P 500 was able to reduce its losses to only 0.4% in daily trading. The upward trajectory of mega-cap stocks also pushed certain sectors positive, including information technology, communication services, and consumer discretionary. Cyclical energy, materials, and financials all dropped. The Nasdaq index grew 0.4%, and the Dow Jones dipped 0.9%.

On Friday, all major indexes made modest gains. The S&P 500 was up 0.8% at close. The Nasdaq gained 1.5%, and the Dow Jones advanced 0.4%. Informational technology was strong throughout the day, due to the strong performance of Apple, Facebook, and Amazon. Consumer discretionary and communication services also performed strongly, as did utilities, materials, and financials. However, energy, health care, and industrials all dropped. The market was dragged down a bit due to lawmakers still disagreeing over the next coronavirus relief bill. Alphabet’s first-ever year-over-year decline in revenue also hurt daily trading. Consumer sentiment dropped to 72.5 from the initial reading of 73.2, suggesting that spending activity may decline moving forward. Though personal spending was up in June, even though personal income declined.

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