Dow Jones, Nasdaq, S&P 500 weekly preview: Better than feared Q2 results, worse than expected reactions
S&P 500 (SPX) fell 2.3% last week to mark the biggest weekly decline in 5 months. Despite moving higher in early Friday trading, the stock market reversed its course and headed lower on the back of the July employment report.
Nasdaq Composite (IXIC) fell as much as 2.85% to return trading below the 14000 handle. This represents the biggest weekly decline since early March when the stock market bull rally started and saw the IXIC index gain over 30%.
Dow Jones Industrial Average (DJI) lost just 1.1% as selling was mostly taking place in the growth sector.
The July jobs report was out on Friday with the U.S. adding 187,000 jobs in the last month. The market will now turn its focus to the inflation data, namely Thursday's CPI report and Friday's PPI report.
“July CPI report will likely be another soft report and point to moderation. Headline CPI likely increased by 0.2% m/m resulting in the y/y rate increasing two-tenths to 3.2% as base effects are less favorable than last month. For core inflation, we forecast a strong 0.1% m/m and two-tenths decline in the y/y rate to 4.6%, lowest since Sept 2021,” Bank of America economist Shruti Mishra said in a note.
On the Fed front, this week’s schedule is relatively light with Harker and Bowman set to speak on Monday.
Q2 earnings season: Better than feared, worse than expected reactions
According to Bank of America’s data, 87% of S&P 500 companies reported Q2 earnings. The quarter beat by 2% vs. the consensus so far, which is -6% YoY.
“Sales beat by a lesser 1ppt, as cost cutting and margins drove the earnings surprise (true for all sectors but Health Care and Energy). 70%/60%/48% beat on EPS/sales/both vs. the average 58%/59%/40%,” BofA equity strategists said.
FactSet’s data
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