Mid-Week Market Minute 07.20.22

Stocks around the globe moved higher this week as investors digested a plethora of corporate earnings results. Tuesday marked the strongest trading day in over a month for the S&P 500, leaving the benchmark U.S index higher by about 2% mid-week. Notably, stocks on the New York Stock Exchange (NYSE) achieved a widely followed “90% up day” on Tuesday, with more than 90% of stocks listed on the exchange advancing and accounting for more than 90% of the volume. After plunging into bear market territory, the S&P 500 has rallied more than 7% from the lows of June. On the international front, the MSCI EAFE gained about 3% as recent strength in the U.S. dollar lost momentum, creating a tailwind for international stocks. In earnings, shares of Netflix (NFLX) jumped more than 5% in pre-market trading after saying it lost only 970,000 subscribers in the second quarter, better than the loss of two million previously projected. Shares of International Business Machines Corp. (IBM) fell markedly lower after cutting forecasts and warning of the headwinds presented by a stronger U.S. dollar.

On the data front, a report from the Mortgage Bankers Association showed mortgage demand declining by 6% last week, dropping to the lowest level in 22 years. Applications for mortgages were 19% lower than a year ago as higher prices coupled with higher interest rates has significantly eroded the purchasing power of potential home buyers. For the remainder of the week, investors will continue to watch earnings as well as manufacturing data to evaluate the health of the consumer. Focus next week will be on the Federal Reserve meeting July 26-27, with markets now pricing in about a 70% chance of a 75 basis point (0.75%) rate hike and an expectation of an ending funds rate of around 3.5% by year-end.

Source: GSAM, CNBC, JPMorgan

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