Undaunted by another Fed rate hike and news of a contracting economy, the stock market rallied last week on better-than-expected corporate earnings.
The Dow Jones Industrial Average increased 2.97%, while the Standard & Poor’s 500 picked up 4.26%. The Nasdaq Composite index gained 4.70% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.95%.1,2,3
Stocks Rally on Earnings
It was an inauspicious start to the week after a big-box retailer missed earnings and reduced forward guidance on Tuesday, sparking a broad market retreat.
But sentiment improved following mega-cap technology company earnings that proved better than expected. Enthusiasm gathered steam in the wake of the Fed’s 0.75% rate hike, boosted by Fed Chair Powell’s comments following Wednesday’s Federal Open Market Committee meeting. Powell indicated that it might become appropriate to slow the pace of future hikes, and he didn’t believe the economy had entered into recession. Stocks on Thursday shrugged off news of a second-consecutive quarter of negative economic growth to build on Wednesday’s gains as fresh earnings continued to comfort, if not impress, investors.4
The U.S. economy shrank at an annualized rate of 0.9% in the second quarter as consumers pulled back on spending and businesses worked to reduce inventories. It was the second-consecutive quarter of negative economic growth, meeting the technical definition of a recession. Unlike past recessions, hiring has been strong all year, with the unemployment rate near historic lows.5
The economic slowdown was attributable primarily to decreases in inventories, a deceleration in the housing market, and lower government spending. Consumer spending increased a tepid one percent, well below the inflation rate during the same period.6
This Week: Key Economic Data
Monday: Institute for Supply Management (ISM) Manufacturing Index.
Tuesday: Job Openings and Labor Turnover Survey (JOLTS).
Wednesday: Automated Data Processing (ADP) Employment Report. Institute for Supply Management (ISM) Services Index. Factory Orders.
Thursday: Jobless Claims.
Friday: Employment Situation.
Source: Econoday, July 29, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
Tuesday: Advanced Micro Devices, Inc. (AMD), PayPal Holdings, Inc. (PYPL), Caterpillar, Inc. (CAT), Prudential Financial, Inc. (PRU), Starbucks Corporation (SBUX), Marathon Petroleum Corporation (MPC), Marriott International, Inc. (MAR).
Wednesday: CVS Health Corporation (CVS), Fortinet, Inc. (FTNT), PPL Corporation (PPL), Booking Holdings, Inc. (BKNG), Occidental Petroleum Corporation (OXY), Regeneron Pharmaceuticals, Inc. (REGN).
Thursday: Block, Inc. (SQ), Twilio, Inc. (TWLO), Amgen, Inc. (AMGN), Eli Lilly and Company (LLY), ConocoPhillips (COP), Air Products and Chemicals, Inc. (APD), Albemarle Corporation (ALB), Kellogg Company (K).
Friday: Berkshire Hathaway, Inc. (BRK.A).
Source: Zacks, July 29, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Wealth Watch: Markets Eager After Another Rate Increase, Are Brighter Days Ahead?
After having traded sideways for a few weeks, the market has now broken out of its short-term trading range and the HCM-BuyLine® has firmed up. In other words, a turn back up could be in the cards in the near future. There are some wonderful buys out there IF the markets hold, but some caution is still not a bad idea because there...[READ MORE]7
This communication is issued by Howard Capital Management, Inc. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice.
Don’t Forget to Take Advantage of the Work Opportunity Tax Credit
The work opportunity tax credit is a federal tax credit for business owners that have hired individuals from target groups that would have otherwise faced significant barriers when looking for a job. Some target groups include summer youth employees, those receiving Supplemental Security Income, or qualified long-term unemployment recipients. There are ten targeted groups in total.
The work opportunity tax credit equals 40% of up to $6,000 wages paid or incurred with a maximum credit of $2,400. The WOTC may consider up to $24,000 in wages for certain qualified veteran targeted groups. There are some restrictions on the IRS’ site.8
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Stay Safe This Summer With These Open Water Safety Tips
Summer is the perfect time to spend at the beach, lake, or river. But unfortunately, these natural bodies of water can also be hazardous if you don’t know how to stay safe. Here are some tips to help you and your family stay safe in the water this summer:
- Only swim in the designated swimming area. Take note of flags and buoys that mark where you can and can’t swim.
- When in doubt, get out! If something doesn’t feel suitable, such as a current picking up, it’s better to err on the side of caution and get out.
- Know the conditions before you swim. The more you know about water levels, temperature, and current, the better.
- Never swim alone when in open water. Always swim with a buddy who can look out for you, and you can look out for them.9
Tomato Basil Bruschetta
Cook Time: 13 mins
Yield: Serves 2
- ½ baguette, sliced into ¼ inch pieces
- 1 garlic clove
- 2 cups tomatoes, diced
- 1 tablespoon basil, roughly chopped
- 1 tablespoon Parmesan, shaved and roughly chopped
- ¼ teaspoon balsamic vinegar
- ¼ cup extra virgin olive oil
- Pinch of salt, fresh ground black pepper to taste
- In a medium bowl, combine tomatoes, basil, Parmesan, balsamic vinegar, 1 teaspoon of olive oil, pinch of salt, and ground black pepper to taste. Let sit about 10 minutes to let flavors marinate while toasting the bread.
- Brush both sides of baguette slices with the remaining olive oil and rub with garlic clove.
- Heat 1 tablespoon of olive oil in a large skillet over medium heat. Cook the slices in the skillet until browned, gently pressing occasionally to help toast, about 3-4 minutes per side.
- Sprinkle toasted slices with a pinch of salt. Evenly spoon tomato topping on each slice. Sprinkle with a little fresh ground black pepper. Serve immediately.
Footnotes and Sources
1. The Wall Street Journal, July 29, 2022
2. The Wall Street Journal, July 29, 2022
3. The Wall Street Journal, July 29, 2022
4. The Wall Street Journal, July 27, 2022
5. CNBC, July 28, 2022
6. CNBC, July 28, 2022
7. howardcm.com, July 27, 2022
8. IRS.gov, May 5, 2022
9. NDPA.org, May 26, 2022
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
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