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Weekly Market Update – July 29, 2016

The Dow finished 24 points lower on Friday after data showed the American economy expanded at a disappointing 1.2% annualized growth rate in the second quarter. For the week the Dow was down 0.75%. Year-to-date the index is up 5.8%.

Domestic economic data came in mixed. Q2 GDP grew at a seasonally adjusted rate of 1.2%, well below the 2.6% forecast of economists. A wider trade gap was cited as a drag on GDP. June new home sales increased 3.5% sequentially to 592,000 vs. 560,000 consensus. The Conference Board’s Index of consumer confidence came in better than expected at 97.3 in July. The Markit services Purchasing Managers’ Index (PMI) fell to a five-month low of 50.9 in the July flash reading, down from 51.4 in June and below consensus for 52.5. The Richmond Fed manufacturing index jumped to +10 in July from -10 in June, with most key metrics improving. Weekly initial jobless claims remained low at 266,000. A gasoline glut and signs of increasing production dragged down oil prices. However, high temperature drove natural gas prices higher.

The Federal Open Market Committee (FOMC) held rates steady at its July meeting as expected. However, the Fed changed some language in its statement in recognition of improving economic conditions, noting a strengthened labor market and expanding economic activities. The statement also acknowledged strong growth in household spending and an increase in labor utilization. Moreover, the statement incorporated the phrase “near-term risks to the economic outlook have diminished.” The U.S. government bond yields fell on Friday as a softer economic growth dampened expectations that the Fed will raise interest rates this fall. For the week, the U.S. Preferred Stock Index was up 0.5%.

Earnings were released for Q2 by several well-known and widely held companies. Following earnings, Facebook share price was +1.3%, Apple +6.6%, Gilead -8.5%, Sprint +28%, Amazon +1.9%, and Google +4.5%. Earnings releases will continue in the next two weeks.

Next week’s economic calendar highlights include Construction Spending (Aug. 1st), Personal Income and Auto Sales (Aug. 2nd), Crude Inventory (Aug. 3rd), Initial Jobless Claims (Aug. 4th), and Nonfarm Payrolls (Aug. 5th). The Nonfarm Payrolls will have the greatest impact on the market.

Have a great weekend,
Yansong Pang


Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464