Monday, July 30, 2018

Weekend Wrap: Economy Improved, News Priced Into Stocks

Predictably, second quarter GDP in the US came in at 4.1% according to the government's first estimate.

Because the number was so widely bandied about and dissected prior to Friday's official release, it was also predictable that Wall Street was going to sell the news. That's exactly what happened in a broad selloff to close out the week, though the movement hardly resolves any of the directional disputes currently afflicting the various major indices.

As usual, the question on the street is still "buy or sell?" On Friday, with the NASDAQ and Dow in agreement for a change, the knee-jerk reaction would be to hit the proverbial sell button and head for safer ground. With bond yields improving (the 10-year note closed out the week at 2.96%) and the dollar strong, prudence may indeed prompt a trade into safety or retreat into cash.

President Trump touted the the growth in the economy as terrific, though Wall Street may be viewing the larger picture through a much different lens. Expansion by individual companies remains difficult and challenging, and stocks remain near record high levels.

After all the hoopla surrounding the robust GDP figures, the week of trading resolved nothing, other than skeptics' fears that the stock market is running on fumes.

Sideways with a slight tilt to the upside seems the dominant direction, for now. The market is extremely vulnerable to sudden shocks, which could come from a variety of sources, especially Europe or emerging markets (China). While US conditions may indeed be improving, the rest of the world may have to pay a price.

Dow Jones Industrial Average July Scorecard:

Date Close Gain/Loss Cum. G/L
7/2/18 24,307.18 +35.77 +35.77
7/3/18 24,174.82 -132.36 -96.59
7/5/18 24,345.44 +181.92 +85.33
7/6/18 24,456.48 +99.74 +185.07
7/9/18 24,776.59 +320.11 +505.18
7/10/18 24,919.66 +143.07 +648.25
7/11/18 24,700.45 -219.21 +429.04
7/12/18 24,924.89 +224.44 +653.48
7/13/18 25,019.41 +94.52 +748.00
7/16/18 25,064.36 +44.95 +792.95
7/17/18 25,119.89 +55.53 +848.48
7/18/18 25,199.29 +79.40 +927.88
7/19/18 25,064.50 -134.79 +793.09
7/20/18 25,058.12 -6.38 +786.71
7/23/18 25,044.29 -13.83 +772.88
7/24/18 25,241.94 +197.65 +970.53
7/25/18 25,414.10 +172.16 +1142.69
7/26/18 25,527.07 +112.97 +1255.66
7/27/18 25,451.06 -76.01 +1179.65

At the Close, Friday, July 27, 2018:
Dow Jones Industrial Average: 25,451.06, -76.01 (-0.30%)
NASDAQ: 7,737.42, -114.77 (-1.46%)
S&P 500: 2,818.82, -18.62 (-0.66%)
NYSE Composite: 12,921.34, -32.05 (-0.25%)

For the Week:
Dow: +392.94 (+1.57%)
NASDAQ: -82.78 (-1.06%)
S&P 500: +16.99 (+0.61%)
NYSE Composite: +131.43 (+1.03%)

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