The U.S. equity market experienced a nice move higher this month across all major indices. The Nasdaq is up about 3.77%, the Dow Jones jumped up by 3.06%, and the S&P 500 gained ground up 2.96%. This positive momentum was propelled by better-than-expected earnings reports released throughout the month. Inflation appears to be on the decline as well - leading to a positive tone in traders.
July's economic data also showed growth continuing to develop across many sectors. The Core PCE Price Index(used to predict inflation), creeped lower in June, solidifying consumer optimism about the potential of steady growth with weakening inflation.
The sentiment across markets remains upbeat due to some positive updates from central banks. The Federal Reserve remains cautious about rate hikes, with the direction of inflation headed where it is, there may not be a need for the Fed to make a move right now.
One commodity that can be a good indicator for the market, crude oil, has seen prices increase which is contrary to the stock market’s behavior in July, could lead to inflationary concerns. Oil prices back over $80 per barrel is a cause for concern. Traders closely monitored this factor, along with the Q2 earnings reports from major companies like Amazon and Pfizer.
The combination of better than expected earnings, improving inflation metrics and economic indicators all played roles in July’s positive month in equities. Investors will now monitor data releases to gage if this current move is here to stay or will it be short-lived.
Disclaimer: Past performance is not indicative of future returns. Opinions are my own. Profitable trades are not guaranteed.
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