To The Moon

US market last week’s performance was not uniform across the board (see above).

• DJIA: +2.10% to 35,227.69. Rallied 10 days non-stop, its longest rally since 2017.

• S&P 500: +0.69% to 4,536.34. Index is a mere 5.4% below its all-time peak.

• Nasdaq: -0.57% to 14,032.81. Strongest YTD index of the three at +35.66% gain.

Apart from Dow Jones index enjoying a 10-day rally, below 2 Funds have also enjoyed 4 days of uninterrupted gains:

• Energy ( $Energy Select Sector SPDR Fund(XLE)$)

• Health Care ( $Health Care Select Sector SPDR Fund(XLV)$).

I think, US market performance this week will continue to be influenced by:

1. Q2 2023 earnings report.

2. Official data on US economy.

3. July 2023 interest hike.

Quarterly Earnings Summary.

So far, 18% of S&P 500 companies have reported their Q2 2023 earnings:

• Of which, 75% have reported earnings per share above estimates.

• According to FactSet, this is slightly below the 5-year average of “78%”.

• Is this good, bad or mixed news? Leave you to draw your own conclusions.

Last week earnings results were mainly Bank stocks.

Companies’ earnings (this week) will mainly be from:

• Technology - 25 Jul - Microsoft, Google, Microsoft, Texas Instrument. 26 Jul - Meta Platform. 27 Jul - Amazon, Intel Corp.

• Credit services - 25 Jul - Visa. 27 Jul - Mastercard.

• Energy - 25 Jul - NexEra Energy. 27 Jul - Shell Petroluem. 28 Jul - Exxon Mobil, Chevron.

Official data out this week that may influenced US market performance are:

• 25 Jul - Conference Board Consumer Confidence economic data.

• 26 Jul - New home sales (Jun 2023).

• 27 Jul - Q2 2023 GDP, first estimate. Weekly jobless claims.

• 28 Jul - Personal Consumption Expenditure June 2023.

They reveal:

• How is US economy performing?

• How is consumers’ confidence, in the face of inflation and job loss.

• Is inflation decelerating?

July 2023 FOMC Meeting - Blackout period 15 Jul to 27 Jul

• FOMC blackout period is enforced since Sat, 15 Jul 2023 (see above).

• It ends this Thu, 27 Jul 2023.

• This explain why there is hardly any socialization news from Fed members.

• Fed officials would be able to comment from Friday onwards.

CME FedWatch tool as of 24 Jul 2023

• The CME FedWatch tool (see above) indicates market is placing a 99.8% probability that the Fed will raise interest further when it convenes tomorrow.

• When the hike is confirmed, the “new” interest rate range will be between 5.25% & 5.5%.

• This will bring the Fed funds rate to its highest level since 2001.

Will US market:

• React “negatively” to the interest hike, despite Fed’s prior socialization.

• No reaction as Wall Street has already factor in the interest hike earlier on.

What Would Be Good Buy?

Consider “defensive” stocks to fortify one’s portfolio, making it resilient?

For considerations: (only)

• Beaten-down Energy stocks ( $Chevron(CVX)$ , $Exxon Mobil(XOM)$ )

• Utility stock ($NextEra(NEE)$, American Water Works Company, Inc. ($AWK)).

• Do you think the above 3 elements will be dictating US market performances this week?

• Do you think adding Energy or Utility stocks is a good hedge against a mild recession?

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