Stocks Up on Solid Corporate Earnings

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Jul 18, ehe S&P 500 Index(SPX) and Nasdaq Composite Index (COMP) reached new records during the week, supported by solid corporate earnings reports and generally favorable economic data. Both indexes are now up about 7% to 8% this year thus far, while the Dow Jones Industrial Average(DJI) ended in negative territory for the week but is up 4.23% year-to-date.

The Q2 corporate earnings season began in earnest last week, and thus far companies have beaten expectations. About 12% of companies have reported earnings, and of these, 86% have exceeded forecasts, well above the 10-year average of 75%. JP Morgan Chase(JPM), the largest U.S. bank, and Citigroup(C) both reported better-than-expected results. Well-known consumer-facing names such as PepsiCo, United Airlines, and Netflix also released reports that beat forecasts. Refer to below major indexes weekly performance tables.

Key highlights for the week and next:

1.    U.S. consumer price index (CPI) inflation for June came out in line with expectations last week, with headline CPI up 2.7% year-over-year, a tick higher than forecasts of 2.6% and above last month's 2.4% reading. 

2.    Producer price index (PPI) inflation, where many investors expected to see tariff increases show up more acutely, came in lower than expectations. Headline PPI inflation was 2.3%, below forecasts of 2.5% and last month's revised 2.7% reading. 

3.    Retail sales surpassed forecasts, indicating the consumer remains healthy: U.S. retail sales for June were another sign that the consumer continues to spend. Overall retail sales climbed by 0.6% for the month, well above forecasts of 0.1% and last month's -0.9% reading. 

4.    Chipmaker NVIDIA announced that it had received permission from the Trump administration to sell its H2O artificial intelligence chips to China. NVIDIA, which hit the USD 4 trillion market capitalization level for the first time in early July, rallied on the announcement. 

5.    Tariffs continue to remain an overhang on markets, with investors in wait-and-see mode ahead of the new August 1 tariff deadline and potential sector tariffs. However, even as tariff rates have moved substantially higher since the beginning of the year, inflation has remained contained and economic growth has held up. 

SPX sectors in play

Eight out of the 11 SPX sectors recorded weekly gains, Tech(XLK) and Financials(XLF) were among top gainers. Energy(XLE) and Health Care(XLV) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Stock markets continued to gradually move higher, with the SPX and technology-heavy Nasdaq making fresh all-time highs. Both indexes are now up about 7% to 8% this year thus far.  The SPX is now up over 26% since the April 8 lows. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets recorded a weekly gain. The Shanghai Composite Index(SSE) added 0.69% and the blue-chip CSI 300 gained 1.09%. In Hong Kong, the benchmark Hang Seng Index advanced 2.84%. (refer to the above weekly performance table).

Key highlights for the week and outlook for China/HK:

1.    China’s GDP increased 5.2% in the Q2, compared with the Q1’s 5.4% growth pace. Analysts said the Q2’s higher-than-expected growth would likely ease pressure on Beijing to roll out further stimulus measures anytime soon. 

2.    Analysts cautioned that growth would likely slow in the year’s second half amid worsening deflation pressures, weak retail sales growth, and the potential for a flareup in U.S. trade tensions once a temporary deal expires in mid-August. Earlier this month, China reported that its producer price index fell the most in nearly two years in June, the 33rd straight month of factory deflation. 

3.    Persistent weakness in China’s housing market has also renewed calls for more stimulus from the central government. New home prices in 70 cities nationwide fell 0.27% in June month on month, while values for existing homes fell 0.61%, the statistics bureau reported Tuesday. Residential sales dropped 12.6% in June from a year earlier, the sharpest decline this year, according to Bloomberg. The data showed that China’s property slump—now in its fifth year—continues to weigh on consumer demand. 

Refer to below .HSI stocks performance of the week.

Click below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

 

Singapore

The Straits Times Index (STI) accelerated its upswing into 4^th week, gained further 2.49% to close at 4189.50 point this week. The bulls are strong and some analysts lift STI’s year end target to 4500 level.

Refer to below table for STI index stocks weekly performance.

STI index stocks Year-To-Date return.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.