US equities finished higher last week. The Dow gained 1% while the S&P 500 lifted 1.4%. Technology company shares once again regained leadership with the tech-laden Nasdaq index gaining a whopping 2.6% for the week. The telecom and financial sectors lagged along with small and mid-capitalization company shares. The G20 meeting overseas and ongoing Republican efforts around healthcare legislation dominated last week’s political headlines.
However, these events have had little impact on markets as investors have seemingly put aside any expectations with respect to legislative action until more concrete developments emerge. Equity markets rose with the launch of the second quarter earnings season. Thirty companies in the S&P 500 have reported results of which 87% have met or exceeded analysts’ earnings expectations. Banks reported last week with JPMorgan Chase, Wells Fargo, and Citigroup all outpacing their earnings forecasts.
The dollar index was down 90 basis points last week and gold bounced finishing up 1.29% to close at $1226 a troy ounce after breaking-down through support the prior week. As I have noted in the past, gold offers no yield to compete with financial instruments that pay dividends and interest. However, some investors may now be holding some gold as a form a protection (non-expiring put on the markets) in the event President Trump falters, things begin to fall apart and global debt in general continues to explode out of control in which case gold will again shine. Over in the bond markets, U.S. Treasury prices were mostly higher as the reflation trade that has driven a recent backup in global bond yields came under scrutiny.
This information was taken directly from an email update by Castle Financial sent out on July 17, 2017