Top Story
Market Rallies to Close Out the Week As June’s Retail Sales Exceed Estimates
• US stocks rose Friday as better-than-expected economic data may have boosted sentiment. Investors also studied another round of earnings reports, as the market looks for insight as to how aggressively the Fed will hike rates later this month.
• Citigroup (C) posted an upbeat report, saying the rising rate environment boosted the bank’s bottom line. The banking sector is in focus as its performance is often linked to the economy overall. Zooming out, the market is attempting to gauge the likelihood of a recession in the coming months.
• June’s retail sales came in 1.0% higher, month-over-month. Given more than two-thirds of the nation’s economic activity is tied to household spending, this is a significant indicator. The datapoint may have convinced investors that a protracted economic slowdown is less imminent.
What to Be on the Lookout for Today
• The National Association of Home Builders - Wells Fargo (WFC) home builders confidence index for July is due. This kicks things off as the housing market is a major focus of this week’s economic calendar. The index hit a two-year low in June as inflation and rising mortgage rates weighed on sentiment.
• Two more major banks will report earnings after several of the sector’s big names held calls with analysts last week. Both Bank of America (BAC) and Goldman Sachs (GS) are scheduled to hand in report cards. In a report issued last week, Bank of America predicted the US will fall into a recession and that unemployment will hit 4.6% sometime next year. Goldman recently made headlines by hiring a senior executive away from Alphabet’s Google (GOOGL) to head up an innovation division.
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A Few Headlines That Should Be on Your Radar
This week’s earnings reports seem to span the entire economy. Investors will be looking for clues as to how different sectors are performing, especially amid record inflation and rising rates. Telecommunications, electric cars, pharmaceuticals, streaming television, banking, payments, and social media are all in focus this week. It’s worth checking in now, because these are the names you’re likely to hear after the closing bell. Earnings data – good and bad – is driving a lot of activity on Wall Street. Read more >> Amazon (AMZN) is eliminating much of its private-label products, which proliferated over the last several years. Spotty profitability and regulatory scrutiny prompted a detailed analysis of what to cut and what to keep. But what does it mean for consumers who just want to save some money while shopping online? Read more >> PepsiCo (PEP) sees growth opportunity in mini-snacks, in a play to bring more health conscious consumers into its customer base. Sugar and trans fats are also in the company’s cross hairs. The variety of sizes and prices is expected to expand brand appeal. Read more >> Relationships and bank breakups have more in common than you think. SoFi and Refinery29 partnered to survey Millennials on their relationships with their romantic partners and their banks, analyzing red flag similarities and how hard it can be to move on when it just isn’t right anymore. Read more >>Not-So-Breaking News
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Facebook (META) is experimenting with a way for users to have five different profiles tied to an individual account. The pilot program hints at Facebook's goal to increase engagement by becoming a platform that can do more than just share updates with family and friends.
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Wells Fargo (WFC) shared disappointing results on Friday. Both revenue and income fell from the same period a year ago as home lending slowed and the bank set aside more reserves for potentially bad loans.
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Following last Wednesday’s inflation report, top officials across the globe are sounding the alarm, even as recession risk looms. IMF managing director Kristalina Georgieva reiterated the need for central banks to make controlling inflation a priority. The sentiment was echoed by US Treasury Secretary Janet Yellen as she addressed the G-20 on Friday.
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Shares of Pinterest (PINS) popped after The Wall Street Journal reported that Elliott Management had acquired a 9% stake in the social media company. The activist investor has apparently been in discussions with Pinterest for the past several weeks as the company's global monthly active user base continues to decline.
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BlackRock (BLK) reported a 30% drop in second-quarter profit on Friday. Global market volatility has discouraged some investors which has had an impact on fees for the world's largest asset manager.
Financial Planner Tip of the Day
“If you have access to a workplace retirement account and your employer provides a match, contribute at least enough to get your full employer match. That’s a return that you can’t beat anywhere else in the market, and it’s part of your compensation that you should not leave on the table.”
Brian Walsh, CFP® at SoFi