Performance for Week Ending 7/22/16:
The Dow Jones Industrial Average (Dow) gained 0.29%, the Wilshire 5000 Total Market IndexSM (Wilshire 5000SM) added 0.68%, the Standard & Poor’s 500 Index (S&P 500) finished up 0.61% and the Nasdaq Composite Index (NASDAQ) tacked on 1.40%. Sector breadth was mixed with 6 of the S&P sector groups finishing higher and 4 finishing lower. The Technology sector (+2.02%) was the best performer while Energy (-1.31%) was the laggard.
||Closing Price 7/22/2016
||Percentage Change for Week Ending 7/22/2016
||Year-to-Date Percentage Change Through 7/22/2016
*See below for Index Definitions
MARKET OBSERVATIONS:7/18/16 – 7/22/16
The major market indices finished the week higher, marking the fourth consecutive weekly gain for the S&P 500. The S&P has now tacked on over 8% since the post Brexit sell-off. Despite the weekly gains, trading turnover has been on the light side suggesting the recent rally may be starting to run on tired legs. While a pullback in stock prices in the coming weeks certainly cannot be ruled out, a correction in prices would help relieve overbought conditions and set the stage for a buying opportunity at better prices. From a macro standpoint, the US economy remains healthy, labor conditions continue to improve, the likelihood of a recession remains relatively low, earnings growth is set to accelerate in the coming quarters and interest rates policy is expected to remain supportive of risk assets. All in all, the path of least resistance for stocks through year-end should continue to be skewed to the upside.
Q2 Earnings – So Far, Better than Feared: Second quarter earnings season is off to a better than expected start and is likely one of the key drivers of recent market gains. According to Thomson Reuters, analysts now expect overall earnings of S&P 500 companies to decline 3.3% in the quarter, less than the 5%-plus drop estimated at the start of the earnings season. Bloomberg data shows that of the 125 S&P 500 companies that have reported through Friday, 82 percent have beaten earnings estimates with an average upside surprise of just over 6 percent. Top line growth has also been better than expected with 60 percent of companies beating forecasts.
The Week Ahead: The focal point of the coming week will be the two-day Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. While no changes in interest rate policy are expected, the tone of the meeting will be watched closely. The recent rebound in economic data and the limited fallout from the EU referendum could lead to a more ‘hawkish’ tone, which could raise the probability of a rate hike before year-end. According to Bloomberg, the probability of a hike at the September meeting is 26% while the odds of a move in December stand at just under 47%. Quarterly earnings season will also be in focus with just under 200 members of the S&P 500 scheduled to report throughout the week. Included in this group are 12 members of the Dow Jones Industrial Average. The data calendar will also be busy. Economic reports of interest include the May S&P Case-Shiller home price data, June new home sales, July consumer confidence report, June durable goods orders, the first estimate of second-quarter GDP, the Chicago purchasing manager’s index (PMI) for July and the University of Michigan’s July consumer sentiment survey. Outside the United States, the Bank of Japan is scheduled to meet at the end of the week.
The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.
Wilshire 5000 Total Market IndexSM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.
Standard and Poor's 500© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.
Indices do not include any expenses, fees, or sales charges, which would lower performance. Indices are unmanaged and should not be considered an investment. It is not possible to invest directly in an index.
The individual companies mentioned in this piece were for informational purposes only and should not be viewed as recommendations.
The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. This document contains forward-looking statements about various economic trends and strategies. You are cautioned that such forward-looking statements are subject to significant business, economic and competitive uncertainties and actual results could be materially different. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time and are the opinion of the individual strategist. Information in this report does not pertain to any investment product and is not a solicitation for any product. This material has been prepared using sources of information generally believed to be reliable. No representation can be made as to its accuracy.
Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC ("Guggenheim"). Guggenheim Funds Distributors, LLC is an affiliate of Guggenheim.
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objective, risks charges, expenses and the other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available) click here or call 800.820.0888.
Investing involves risk, including the possible loss of principal.
*Assets under management is as of 3.31.2021 and includes leverage of $15.4bn. Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Fund Management (Europe) Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.
Guggenheim Investments. All rights reserved.
Research our firm with FINRA Broker Check.
• Not FDIC Insured • No Bank Guarantee • May Lose Value
This website is directed to and intended for use by citizens or residents of the United States of America only. The material provided on this website is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation. Investing involves risk, including the possible loss of principal.