The 2021 second quarter earnings season has started out strong. So far, 20% of S&P 500 companies have reported and earnings and sales growth are coming in a lot stronger than expected.
The S&P 500 inched up to again make a new all-time high led by tech mega-caps. Small caps were down 2.2% and continued their notable underperformance of late. Emerging markets remain down on the month but are not faring as bad as domestic small cap equities.
We were blessed with the largest nonfarm payrolls increase in 10 months in June, with 850,000 jobs added. We also saw unemployment increase from 5.8% to 5.9%, however this is not a bad sign.
The S&P 500 inched up to make a new all-time high. Under the surface, however, things are not so strong with less than 50% of the Index trading above its 50-day moving average.
As economies around the globe continue to recover from the pandemic-induced downturn, one of the topics receiving an ever-growing amount of attention is the prospect for a surge in the rate of inflation.
Some new housing data was released this week. Existing home sales came in higher than expected but lower than the previous month. We have seen month-over-month dips since the beginning of the year.
Headline Consumer Price Index (CPI) was hotter than expected with a gain of 5.0% versus the previous year. Core CPI was up 3.8% versus the prior year, its highest reading since 1992.
The big number being talked about this week is the unemployment rate. The reading of 5.8% is down from last month’s 6.1% and the number of unemployed people is at 9.3 million.
Equity indices languished on the week inside a very tight range. The S&P 500 gained 0.3% and the NASDAQ Composite gained 0.2% as heavyweights stalled. However, oversold names rallied as did small caps.