Market Summary
The S&P 500 index has advanced to new highs to begin Q3. The S&P 500, the NASDAQ, and the Dow all posted marginal weekly gains, adding to their record highs set in the previous week.
U.S. Treasury yields fell as investors worried the U.S. economic recovery might be losing steam as the Delta variant of the coronavirus spread globally.
On Friday, President Biden launched another attack on Big Tech. This time, however, the anti-competition clampdown is not exclusive to mega-cap Tech names. The manufacturing and pharmaceutical industries are in the firing line as well.
Equities
0.5%S&P 500
More all-time highs this week despite some mid-week volatility.
While the overall weekly index moves may seem negligible, considerable rotation continues beneath the surface.
Large-Cap Growth is now up 7.8% over the past month, while Large Cap Value is down -1.8%. The fear of rising interest rates had beaten Growth-heavy equities down in the face of inflationary pressures, but the trend has reversed since mid-May.
Small Caps are also out of favour. Following a solid start to the year, the Russell 2000 Index has now given up all its year-to-date outperformance. The Small Cap Index declined -2.3% versus a 2.7% gain for the Large Cap Russell 1000 Index in June.
MONDAY STOCK WATCH
3.9%DISNEY
Disney stock jumped over 3% in early morning trading this morning following the successful launch of ‘Black Widow.’ Not only is the Marvel movie the highest-grossing movie of the pandemic era, but Disney also reported earnings of $60 million directly from its Premier Access feature of the film. This feature allowed Disney+ customers to stream the movie as soon as it made its big-screen debut. Will this post-Covid hybrid form of movie release be the death of Cinema?
17.81%Virgin
After nearly 17 years of Virgin Galactic development, Billionaire Sir Richard Branson and crew successfully completed the maiden voyage for the aspiring space tourism company. Despite a successful and historic launch, SPCE stock has been selling off this morning following an announcement that the company plans to sell up to $500 million worth of common stock, diluting investors’ existing position.
Market Outlook
It’s that time of the quarter again: earning season is just around the corner. With markets at all-time highs, the importance of strong earnings cannot be overstated, anything less will be sure to cause a pullback.
For Q2 2021, analysts are predicting a blowout quarter. the estimated earnings growth rate for the S&P 500 is expected to reach 65%. While these year-over-year figures need to be taken with a pinch of salt, given the earnings depravity witnessed in 2020, they highlight the substantial rebound these companies have made and continue to make since the onset of the pandemic.
Investors should keep an eye out for banks, consumer discretionary, and industrials over the coming weeks, all of which are expected to have enjoyed a stellar quarter.
Inflation numbers will also be releasing on Tuesday. Eagerly awaited Consumer Price Index figures will determine whether market participants were right to shrug of the recent inflation pressure.
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