Weekly Recap:Tech Stocks Extend Gains, Focus on CPI this Wednesday

U.S. Stocks cooled off in the wake of the previous week’s rally, and the major U.S. indexes finished mixed overall. The $NASDAQ(.IXIC)$ gained more than 2%, the $S&P 500(.SPX)$ and the $DJIA(.DJI)$ were little changed, and growth stocks generally outperformed their value counterparts.

As of last Friday,$DJIA(.DJI)$ YTD is -9.73%,$NASDAQ(.IXIC)$ YTD is -19.1%, $S&P 500(.SPX)$ YTD is -13.3%. $S&P/ASX 200(XJO.AU)$ & $Straits Times Index(STI.SI)$ in YTD performance is -5.86% & -4.43% respectively.

Last week showed a strong job market, which could mean further rate hikes by the Federal Reserve. The market believes that the employment data has greatly eased recession fears, but at the same time, because wage growth is still accelerating, the market is beginning to worry about a spiral in wage prices, which may repeat the stagflation situation of the 1970s.

Macro Factors:

Jobs Surprise: Despite the recent slowdown in U.S. economic growth, the labor market continues to exceed expectations. The government reported that the economy added 528,000 jobs in July—far exceeding most economists’ forecasts—and unemployment slipped to 3.5% from 3.6%.

Pandemic Jobs Recovery:The latest monthly employment gain marked a milestone, as the U.S. economy recouped the 22 million jobs lost in the initial months of the pandemic nearly two and a half years ago. The unemployment rate also returned to its February 2020 prepandemic level.

Earnings Momentum: Earnings performance continued to improve, as Q2 profits at companies in the S&P 500 were expected to increase 6.7%, based on companies that have reported so far and forecasts for firms that haven’t yet released earnings, according to FactSet. That’s up from the 5.8% rise that had been projected at the end of the previous week. About 87% of companies had reported results as of Friday.

U.K. Rate Hike: With inflation continuing to surge, the Bank of England raised interest rates by a 50bps—the United Kingdom’s largest rate increase since the bank was made independent from the British government in 1997. Policymakers projected the U.K.’s longest recession since the global financial crisis.

Sectors Performances:

The 11 major S&P sectors ended mostly higher last week. The Technology sector was the top gainer, closing up 3.3%, while the communications sector rose 1.52%. Consumer Cyclical rose1.38%, Industrials rose 0.76%, Utilities rose 0.3%, and Financial sector rose 0.11%,. The Consumer Defensive sector decline 0.03%,  the energy sector fell 5.28%, the basic materials sector closed down 0.65%, and the real estte sector fell 0.99%.

Weekly Top Gainners of S&P 500：

U.S. technology growth stocks extended gains last week. $Ceridian Hcm Holding(CDAY)$ ,$Monolithic Power(MPWR)$ ,$Moderna, Inc.(MRNA)$ ,$Paycom(PAYC)$ ,$Gartner(IT)$ ,$ServiceNow(NOW)$ ,$DISH Network(DISH)$ ,$PayPal(PYPL)$ ,$AES Corp(AES)$ ,$Norwegian Cruise Line(NCLH)$ are the top 10 gainers.

Other Markets:

Bond Price Sell-off: Friday’s stronger-than-expected jobs report added to the selling pressure on prices of government bonds, sending yields sharply higher. The yield of the 10-year U.S. Treasury bond climbed to around 2.84% on Friday, up from 2.64% at the end of the previous week.

Oil Slick: The price of U.S. crude oil $Light Crude Oil - main 2208(CLmain)$ fell below $90 per barrel for the first time since the Russia-Ukraine war began in February. Oil was trading around $88 on Friday afternoon for an overall decline of nearly 10% for the week.

Gold on Pressure: Non-agricultural data is the largest increase in 5 months, far exceeding expectations.There is still a lot of pressure on the medium and long-term price of gold$Gold - main 2212(GCmain)$ , and the golde is fighting for break through short term pressure.

​The Week Ahead: August 8-12

$Palantir Technologies Inc.(PLTR)$,$Tyson(TSN)$,$Upstart Holdings, Inc.(UPST)$,$Coinbase Global, Inc.(COIN)$,$Walt Disney(DIS)$,$Rivian Automotive, Inc.(RIVN)$

A Consumer Price Index report scheduled to be released on Wednesday will show whether the U.S. economy got any relief last month from surging inflation. In June, inflation accelerated at an 9.1% annual rate—the highest in more than four decades and above the previous month’s 8.6% figure.

Monday

• No major reports scheduled

Tuesday

• Productivity and unit labor costs, U.S. Bureau of Labor Statistics

Wednesday

• Consumer Price Index, U.S. Bureau of Labor Statistics
• Wholesale inventories, U.S. Census Bureau
• Federal budget, U.S. Department of the Treasury

Thursday

• Producer Price Index, U.S. Bureau of Labor Statistics
• Weekly unemployment claims, U.S. Department of Labor

Friday

• University of Michigan Index of Consumer Sentiment, preliminary result
• Export and import prices, U.S. Bureau of Labor Statistics