Market Update for week 31

Market Recap

WEEK OF JUL. 29 THROUGH AUG. 2, 2024

The S&P 500 declined for a third straight week following downbeat jobs data and disappointing financial results in the technology sector. I would note that most years have a decline of around 10% at some point. We are likely in the middle of just such a phase.

The benchmark equity index ended Friday's session at 5,346.56, down from last week's close of 5,459.10. The consumer discretionary and tech sectors fell more than 4% each, with energy, financials, industrials, and materials also posting losses for the week. Utilities led the gainers with a 4.3% increase. Real estate, communication services, consumer staples, and healthcare also saw gains.

The US economy added 114,000 jobs last month, the Labor Department said, missing a forecast compiled by Bloomberg for an increase of 175,000 jobs. June payrolls saw a downward revision to a 179,000 increase, and May payrolls were revised down to a 216,000 increase, for a net downward revision of 29,000 jobs.

The department said the unemployment rate rose to 4.3% in July from 4.1%, but analysts expected the rate to remain unchanged month over month.

Data released earlier in the week showed continued contraction in the US manufacturing sector in July amid weak demand, while weekly applications for unemployment insurance hit the highest level in nearly a year.

On Wednesday, the Federal Reserve's monetary policy committee kept interest rates unchanged at 5.25% to 5.50%, its eighth straight pause. Fed Chair Jerome Powell said a September rate cut "could be on the table," though policymakers will remain data-dependent.

The tech sector was dragged lower by an almost 32% slump in Intel (INTC). The chipmaker's Q2 financial results fell short of market expectations. The company outlined a $10 billion cost-cutting plan, including a more than 15% headcount reduction.

Qualcomm (QCOM) sank 12% for the week on warning of a revenue hit from the US government's decision to revoke its license to export products to China's Huawei Technologies. Microsoft's (MSFT) fiscal Q4 intelligent cloud revenue missed Wall Street's estimates, while Amazon.com's (AMZN) Q2 revenue trailed market views.

Consumer discretionary was weighed down by a 9.7% slump in Marriott International (MAR) after the hotel giant cut its full-year earnings outlook following a Q2 sales miss. McDonald's (MCD) jumped 9.8% after the fast-food heavyweight said nearly 93% of its restaurants in the US have committed to extending its $5 meal deal "even further" into the summer.

Hess (HES) dropped 8.6% for the week following a Q2 revenue miss, weighing on the energy sector. The financials sector posted a weekly loss despite a 6.3% rise in PayPal (PYPL). The digital payments company raised its earnings outlook following a Q2 beat. Mastercard (MA) rose 5.4% on better-than-expected quarterly results.

Industrials' weekly loss came even as C.H. Robinson Worldwide (CHRW) jumped 10% after logging better-than-expected Q2 earnings. In health care, Moderna (MRNA) slipped 29% after the drugmaker cut the full-year product sales guidance for its respiratory business amid growing competition in the US and low demand in the European Union. Merck (MRK) fell 8% after lowering its earnings guidance to reflect the costs tied to its Eyebiotech acquisition.

A 4.8% gain in Meta Platforms (META) buoyed the communication services sector. The Facebook parent's Q2 earnings and sales surpassed the Street's estimates, driven by stronger-than-expected advertising revenue.

Next week's major earnings include Walt Disney (DIS), Eli Lilly (LLY), Amgen (AMGN), Caterpillar (CAT), Uber (UBER), CVS Health (CVS), Paramount Global (PARA, PARAA) and Hilton Worldwide (HLT).

Utilities' gain came amid a 1.8% rise in Vistra (VST), which received 20-year licenses to continue operating the Comanche Peak Nuclear Power Plant through 2053.

Up Next

Next week's economic calendar will feature the Institute for Supply Management's report on the US services sector's July performance.

All the Best,

Gordon Achtermann, CFP®
Gordon@yourbestpathfp.com

703-573-7325

Your Best Path Financial Planning delivers comprehensive planning and investment management to families and individuals, whether you live in Fairfax, Virginia, or nationwide.