Market week: Stock indexes gain in July
Fading consumer sentiment clouds outlook
Strong second-quarter earnings reports from the big U.S. technology majors helped drive the major American stock indexes to weekly gains, although dismal results in the energy sector took some of the edge off. In addition, COVID-19 cases continued to spread through most Southern U.S. states, with Florida, Texas, and Arizona recording record high death tolls during the week, followed by California.
U.S. consumer spending rose 5.6% in June, but personal income slipped 1.1%, while unemployment claims have been edging up in July, suggesting softer spending data for July. The University of Michigan’s consumer sentiment index slipped to 72.5 in July from 73.2 in June.
Technology majors Alphabet Inc., Amazon.com Inc., Apple Inc., and Facebook Inc. reported strong quarterly earnings, while Microsoft Corp. was reported to be in talks to acquire the U.S. operations of social media firm TikTok from the Chinese-government-controlled Bytedance. That helped propel the Nasdaq Composite Index to a 3.7% gain for the week, for a monthly advance of 6.8%, putting the Nasdaq ahead almost 20% year to date.
Steep earnings declines for oil majors ExxonMobil Corp. and Chevron Corp. weighed on the S&P 500 Composite Index, limiting the weekly gain to 1.7%. While the S&P 500 managed to advance 5.5% for the month, the index lags the Nasdaq year-to-date, gaining only 1.3%.
In Canada, the S&P/TSX Composite Index was held back on the week on flash estimates from Statistics Canada that gross domestic product shrank 12% in the second quarter. Moreover, the influential energy sector continued to take a beating as crude oil prices sank 2.2% on the week, with the S&P/TSX Capped Energy Index down 5% on the week and 49% year to date. Still, crude oil managed a 3% gain for the month in July. Gold, meanwhile, benefitted from its safe-haven reputation, climbing nearly 5% on the week, flirting with the record-high $2,000 level, and gaining 11% in July overall, for a 31% year-to-date advance. The S&P/TSX Equal Weight Global Gold Index has rallied 123% since its lows in March.
Fund news and updates
* Manulife fund mergers and terminations. Manulife Investment Management on July 28 announced a number of fund mergers and terminations, subject to approvals.
- Manulife Floating Rate Income Fund will be merged in Manulife U.S. Unconstrained Bond Fund on or about Oct. 23.
The following mutual funds will be terminated effective on or about Oct. 19:
- Manulife Canadian Dividend Growth Class
- Manulife Growth Opportunities Class
- Manulife Short Term Yield Class
And effective on or about Sept. 30, the following closed-end funds will be terminated:
- Manulife Floating Rate Senior Loan Fund (TSX: MBK.UN)
- Manulife U.S. Regional Bank Trust (TSX: MFR.UN)
* Invesco renames funds. Invesco Canada Ltd. announced on July 29 plans to change the investment objectives and names for three existing Invesco Canada funds, subject to approvals.
- Invesco Tactical Bond ETF (TSX: PTB) will to Invesco ESG Canadian Core Plus Bond ETF (TSX: BESG) on Oct. 15. Likewise, the mutual fund version Invesco Tactical Bond ETF Fund will be renamed Invesco ESG Canadian Core Plus Bond ETF Fund.
- Invesco DWA Global Momentum Index ETF (NEO: DWG) will become Invesco S&P 500 Momentum Index ETF (NEO: MOM) on Oct. 30.
* CIBC debuts two new global equity ETFs. CIBC Asset Management Inc. on July 27 announced the launch of two new actively managed ETFs:
- CIBC Global Growth ETF (TSX: CGLO) holds a diversified portfolio shares of companies located anywhere in the world with high valuations and growth prospects by investing primarily in Renaissance Global Growth Fund, which is sub-advised by Walter Scott & Partners Limited.
- CIBC International Equity ETF (TSX: CINT) holds a diversified portfolio of shares of foreign companies in Europe, the Far East, and the Pacific Rim by investing primarily in Renaissance International Equity Fund, which is also sub-advised by Walter Scott & Partners Limited.
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