Market week: Earnings, GDP power gains

07-26-2019
Market week: Earnings, GDP power gains

S&P 500 closes week at record high

U.S. stock markets continued their bullish trend this past week, powered by robust second-quarter earnings reports and an annual 2.1% GDP growth rate for the second quarter. Still, the report was darkened by softness in business investment, industrial production, and hours worked. And inflation remained subdued, as the Fed’s preferred core measure, personal consumption expenditure, was a weaker-than-expected 1.8%.

Still, with a possible rate cut in the offing next week, and the economy apparently in growth mode, the S&P 500 Composite Index posted an intra-day record high of 3,027.98 on Friday, in addition to a record high close of 3,025.86, for a week-over-week advance of 1.7%.

Strong quarterly net income reports from Google-parent Alphabet Inc. (NSD: GOOG) (US$9.95 billion, or US$14.21 a share) and social media giant Twitter Inc. (NYSE: TWTR) (US$1.12 billion, or US$1.43 a share) helped boost the big indices. The tech-heavy Nasdaq Composite Index was a particular beneficiary, as the U.S. Dept. of Justice also approved the US$26 billion merger of telecoms T-Mobile U.S. Inc. (NSD: TMUS) and Sprint Inc. (NYSE: S).

Strength in the energy sector buoyed Toronto’s S&P/TSX Composite Index to a 0.3% weekly gain, as a cut in Alberta’s provincial corporate tax rate to 8% from 12% last month contributed to gains in second quarter net income of energy majors like Cenovus Energy Inc. (TSX: CVE) ($1.78 billion, or $1.45 per share), Suncor Energy Inc. (TSX: SU) ($2.73 billion, or $1.74 per share), and Husky Energy Inc. (TSX: HSE) ($370 million, or $0.36 per share). In addition investor sentiment was bolstered by hopes that Alberta’s new United Conservative Party government will lift the restrictive oil curtailment program imposed by the previous NDP government.

 

Index July 26, 2019 close Day Week Year to date  
S&P/TSX Composite      16,532.04 -0.3% 0.27% 15.42%  
S&P 500 Composite        3,025.86 0.7% 1.65% 20.70%  
Nasdaq Composite        8,330.21 1.1% 2.26% 25.54%  
Gold (US$)      $1,423.00 0.6% -0.25% 11.20%  
Oil (WTI) (US$)           $56.16 0.3% 0.04% 23.67%  

Monitor the main stock and commodity indices daily with the Fund Library’s interactive Markets Page.

FUND NEWS

* Mackenzie debuts emerging markets bond ETF. Mackenzie Investments today announced on July 25 the launch of its new Mackenzie Emerging Markets Bond Index ETF (CAD-Hedged) (TSX: QEBH), which tracks the Solactive EM USD Govt & Govt Related Bond Select CAD Hedged NTR Index. The new ETF will invest primarily in U.S. denominated emerging market government bonds and government-related bonds. It has a management fee of 0.45% and aims to provide Canadian investors with exposure to emerging market debt and opportunities for higher yield and better diversification in a tax-efficient manner.

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