Strong July sets up S&P 500 for more gains in August and September, Bank of America says
The market’s strong performance in July could be lead to more gains in August and September, data compiled by Bank of America shows.
Stephen Suttmeier, a technical strategist at the bank, said in a note that, when the S&P 500 rises 5% or more in July, “August and September show stronger seasonality vs when July is not up 5% or more and for all years back to 1928.”
More specifically, the benchmark index averages a return of 2.01% in August after such a strong July, with the S&P 500 rising 59% of the time. September, meanwhile, is up 55% of the time and averages a return of 0.73% in these scenarios.
The S&P 500 rallied 9.1% in July, marking its biggest one-month gain since November 2020.
European markets make a cautious start to August trading; HSBC up 6%
Alibaba says will work to keep trading in U.S., Hong Kong after being added to SEC delisting risk list
Chinese e-commerce giant Alibaba said it will comply with U.S. regulators and work to maintain its listings in New York and Hong Kong.
“Alibaba will continue to monitor market developments, comply with applicable laws and regulations and strive to maintain its listing status on both the NYSE and the Hong Kong Stock Exchange,” it said in a statement to the Hong Kong bourse.
The statement came after Alibaba was added to the U.S. Securities and Exchange Commission’s list of Chinese companies at risk of being delisted for not meeting auditing requirements on Friday. U.S.-listed Alibaba shares plunged 11% in the Friday trading session.
— Sumathi Bala
Wall Street analysts back these ‘safe-haven’ consumer stocks to outperform — even if spending slows
Inflation is hitting consumers’ wallets, and the economy looks to be slowing.
With the consumer accounting for 68% of all economic activity in the first quarter, it is a key metric to watch.
What does all of this mean for consumer-related companies, and will they hold up in a recession? Wall Street analysts pick the consumer stocks they say are resilient, even as the economy slows. Pro subscribers can read more here.
— Weizhen Tan
Growth in Chinese factory activity slowed in July, private survey shows
Chinese factory activity grew in July, but at a slower pace than in June, according to the latest Caixin/Markit manufacturing Purchasing Managers’ Index.
The private survey print came in at 50.4, down from 51.7 in June.
PMI readings are sequential and represent expansion or contraction from the month before. A figure above 50 represents growth.
Over the weekend, official data from the National Bureau of Statistics showed that factory activity declined, with the PMI at 49.
— Abigail Ng
Earnings season numbers
So far, 56% of companies in the S&P 500 have reported results for the second quarter 2022. Of those, 73% have reported EPS results above analyst estimates, according to FactSet.
That means that so far, blended earnings growth – including both companies that have reported and estimates for those reporting later – is 6% for the second quarter. That’s higher than the blended earnings growth seen in last week.
Still, if the actual earnings growth rate is 6% at the end of the season, it will mark the lowest earnings growth rate for S&P 500 companies since the fourth quarter of 2022.
Revenue, on the other hand, is outperforming earnings. The blended revenue growth rate so far is 12.3%, up from last week and last quarter. If the actual revenue growth rate is 12.3% it will mark the sixth-straight quarter of year-over-year revenue growth of more than 10% for the index.
— Carmen Reinicke
Stats for the end of July
All three major indexes ended the day higher on Friday, capping off a solid month of trading in July. Here are other key stats about how stocks traded last month.
- The Nasdaq composite closed more than 22% from 52-week highs, while the S&P 500 and the Dow closed more than 14% and 11% from their 52-week highs, respectively.
- The Dow gained 6.73% in July, its best month since Nov. 2020. It was also the S&P 500’s best week since Nov. 2020. It gained 9.11% in July.
- The Nasdaq composite gained 12.35% in July and broke a three-month losing streak. It was the best month for the index since April 2020.
- Only health care, consumer staples and utilities sectors closed within 10% of 52-week highs. Still, all 11 sectors were positive in the month of July.
- U.S. Treasury yields were lower on Friday, narrowing spreads.
— Carmen Reinicke
Last week in the stock market
Investors are still watching for signs that the U.S. is in a recession and that inflation is slowing down. Last week, the Federal Reserve increased its benchmark interest rate by another three-quarters of a percentage point to stave off high inflation.
The first reading of second-quarter GDP on Thursday was negative, potentially pointing to a technical recession. On Friday, the June personal consumption expenditures hit the highest level since January 1982. The report is a key inflation measure.
Solid earnings reports from Amazon and Apple boosted each company stock and lifted the indexes higher to round out July. Energy companies such as Chevron and Exxon Mobil also rose on better-than-expected reports, ending Friday higher. Not all earnings have been rosy, however. Meta Platforms and Intel both posted disappointing results, sending shares lower.
— Carmen Reinicke
Stock futures open lower
Stock futures opened just slightly lower to start trading Sunday evening.
Dow and S&P 500 futures were lower by 0.2%. Nasdaq futures were off by about 0.3%.
— John Melloy
What’s ahead this week
Stocks enter the typically volatile month of August with a tailwind. There are dozens of earnings reports in the week ahead, with more than 20% of the S&P 500 companies reporting. There is also key data, with Friday’s July jobs report the most important.
Big economic reports could become important catalysts now that the Federal Reserve has indicated it is going to rely on data for its decision on how much to raise interest rates in September. Fed Chairman Jerome Powell said the labor market remains strong, and investors worried about an economic slowdown will be carefully watching to see how strong job creation remains. There are 250,000 jobs expected. According to CFRA, since 1995, the S&P 500 has averaged a 0.5% decline in August. Strategists say earnings could remain a positive force.
“A lot of this is better than feared. If that process continues, it’s likely to help the market grind higher. The market seems to be sitting on this notion that we had priced in Armageddon and thus far, that has not been thrust upon us,” said one strategist.
— Patti Domm