Morning Minutes 7/30/2020

Morning Minutes

US GDP Plunge Drags on Stocks as Earnings Season Continues

July 30, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Stock markets are trading lower this morning, weighed down by reminders of how much damage has been done to the US economy, and how long the road to recovery could potentially be. US Q2 GDP was down 32.9% from the same quarter a year ago, although this was not quite as dismal as the 34.1% drop the street had been expecting. US weekly employment numbers were mixed with initial claims of 1.43M slightly better than expected but continuing claims coming in worse than expected (17.0M vs street 16.2M and previous 16.1M).

US index futures are all down about 0.9% today around this news with Dow Futures falling about 250 points. Overseas, the Dax is down 2.4% and the FTSE is down 1.7%. Gold is down 0.3% today, trading just below $1,950/oz while WTI and Brent crude oil are down 1.1%-1.4%. Tonight China kicks off monthly Manufacturing and Service PMI reporting followed by the US Chicago PMI report tomorrow. Friday is also the last day of the month so we could see some portfolio rebalancing over the next couple of days.

Earnings season continues today with companies across a wide variety of sectors beating expectations. Highlights include: UPS ($2.13 vs street $1.07), Qualcomm ($0.86 vs street $0.71), PayPal* ($1.07 vs street $0.88), Yum Brands ($0.82 vs street $0.54, same store sales have improved in June/July), Procter & Gamble ($1.16 vs street $1.01, boosted by organic growth in household cleaning products), Comcast ($0.69 vs street $0.55), and Kraft Heinz ($0.80 vs street $0.65).

Some of the biggest technology companies remain in focus today as investors respond to yesterday’s anti-trust related testimony to Congress by their CEOs, and today’s earnings reports. The hour after today’s close is kind of like the Super Bowl for technology earnings with Apple*, Amazon.com*, Alphabet and Facebook all scheduled to report results. Other US companies scheduled to report today include ConocoPhillips, Dupont, MasterCard and Ford.

*Shares of PayPal, Apple and Amazon.com are held in some portfolios managed by SIA Wealth Management.

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