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Weekly Economic Update: July 26th, 2022

July 26th, 2022

Weekly Market Update

In this week’s recap: Markets react to dim forecast, 2Q reports.

The Week on Wall Street

Stocks rallied last week as investor spirits lifted thanks to a better-than-expected start to the second-quarter earnings season.

The Dow Jones Industrial Average gained 1.95%, while the Standard & Poor’s 500 added 2.55%. The Nasdaq Composite index jumped 3.33% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 3.54%.^1,2,3

Earnings Propel Stocks

Earnings season kicked off last week, with major banks reporting second-quarter results. While their results were mixed, they appeared to indicate that consumers and businesses remained reasonably healthy–a perspective that helped erase some negative sentiment overhanging the market.

As the week progressed, stocks gained momentum as earnings results poured in from different sectors of the economy, showing that businesses were navigating higher inflation and slowing growth better than investors feared. Technology and other gloomier sectors were among the market’s best performers for the week. A few disappointing corporate reports and a weak economic report sent stocks lower to close out a solid week.

Cracks in the Foundation

Data released last week indicated more trouble in the housing market. The latest monthly homebuilder sentiment survey showed the single largest monthly drop in its 37-year history, except for April 2020. The sentiment report preceded a drop in June housing starts and issued building permits. Housing starts declined for the second month, falling 2.0% and surprising economists who had expected an increase. ^4,5

Housing weakness made itself known through a 5.4% month-over-month decline in June's existing home sales, representing the slowest pace since June 2020. Increasing prices and higher mortgage rates demonstrated drags on buyer demand.⁶

Tip of the Week

If you are 60 now, there is a reasonable chance that you may live into your eighties or nineties. So, with longevity in mind, prepare for retirement with wealth accumulation and wealth protection in mind.

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The Biden Administration's recession denials are nonsense. Consumer spending accounts for 70% of all economic activity. When a majority of Americans believe the U.S economy is in a recession, that will affect spending.

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