Market Commentary, 07/16/18
Stocks continue their strong July, with all indices finishing the second week in a row in the positive: the Dow gained 2.3% to close above 25,000, the S&P was up 1.5% closing above 2,800 for the first time since February, and the Nasdaq rose just shy of 1.8%. The Dow’s growth was powered by three days of triple-digit gains. The Dow did fall Wednesday due to the threat of $200B in tariffs on Chinese goods. However, it recovered Thursday and Friday as the trade tension decreased.
As we mentioned last week, earnings reports began last week with some of the nation’s largest banks reporting positive numbers. Specifically, Bank of America announced that their 2nd quarter earnings rose by 33%, beating expectations by over 10%. This boost in earnings is due to the reduction in corporate taxes and a rise in interest rates. This is a good start and bode very well for quarterly earnings expectations. (Source: Wall Street Journal)
Tech stocks continue to surge as the tech-heavy Nasdaq had it largest daily gain in a month and a half on Thursday and closed at an all-time high on Friday. This close marks a year-to-date return of over 13%. (Source: John Hancock)
Short-term volatility, as measured by the CBOE Volatility Index (VIX), has fallen sharply. The VIX is off more than 30% from the recent June 27th high and down 67% from the 2018 high in early February. This decline favors a strong market over the near-term.
The midyear momentum, surging tech stocks, strong expected earnings and the drop in volatility all point to a positive market move over the coming months.
Jeremiah Patterson, CFP®
Copelin Financial Advisors
514 Brooks Street
Sugar Land, TX 77478
Phone: 281 240-2902
Fax: 281 240-2856
Securities offered through ProEquities, Inc., a Registered Broker-Dealer and Member FINRA & SIPC Advisory Services offered through Harvest Investment Services, LLC., a Registered Investment Advisor Copelin Financial Advisors, Inc and Harvest Investment Services, LLC are independent of ProEquities, Inc.