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SWS Daily Market Update - July 27, 2021


Overview

Markets dropped today after five straight days of gains. Large technology stocks declined ahead of earnings releases. It is not clear whether this represents short term profit taking or the start of a longer reaction to extremely high valuations and worries about growing COVID infections and the risk of inflation. The drop in the markets in China may also be spilling into the US. The strong corporate profits this week were not enough to prevent today’s drop. 80% of SPX companies reporting to date have exceeded analyst expectations. After the market close, Microsoft, Amazon and Apple all reported exemplary results. The 10 year Treasury note was down slightly to 1.235% from 1.276%.


Economy

New orders for durable goods increased by 0.8% in June compared with May. The consensus forecast was a 2.0% gain. The revised increase for May was 3.2%. Durable goods have now increased in 13 of the last 14 months. While low inventories have led to increased demand for products, manufacturers are faced with ongoing supply chain issues that limit their ability to produce goods.


Core capital goods (nondefense excluding aircraft), which are a proxy for business investment, increased 0.5% in June, the same as the increase in May. This measurement is used to calculate equipment spending in the GDP measurement.


Consumer confidence rose to a 17 month high in July to 129.1, up from 128.9 in June and the highest level since February 2020. It has now climbed 6 straight months. The forecast had been a decline to 123.9. The measure of current conditions also climbed to a pandemic high of 160.3 from 159.6. Short term business conditions were 108.4 compared with 108.5 and the labor market view that jobs were plentiful was 59.4 compared with 54.7. Consumer expectations for inflation were down slightly to 6.6% from 6.7%

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The Case-Shiller home price index for May showed a 16.6% annual gain in May, up from 14.5% in April. The month over month increase was 2.1%. This is the 12th consecutive month of accelerating prices.


Markets

The SP 500 dropped by 0.47% to close at 4401.46. The index is up 1.81% over five days, up 2.56% over one month, up 5.13% over three months and up 36.76% over one year.

The trailing P/E is 35.46 compared with 30.59 one year ago and estimated future P/E 22.41. Dividend yield is currently 1.33 compared with 1.90 one year ago.

Leading stocks were FFIV up 6.20%, PNR up 4.64%, BSX up 3.50%, AON up 3.19% and EIX up 2.99%.

Trailing stocks were LW down 13.53%, UPS down 6.99%, ATVI down 6.76%, IPGP down 5.41% and PTC down 5.10%.


The Dow Jones industrial Average dropped by 0.24% to close at 35058.52. The DOW is up 1.58% over five days, up 2.23% over one month, up 3.16% over three months and up 32.90% over one year.

The trailing P/E is 25.63 compared with 23.56 year ago and an estimated future P/E of 19.65. The current dividend yield is 1.79% compared with 2.45 one year ago.

Leading stocks were MCD up 0.97%, MRK up 0.79%, VZ up 0.75%, HON up 0.48% and JNJ up 0.46%.

Trailing stocks were INTL down 2.08%, CRM down 1.65%, BA down 1.59%, AAPL down 1.49%, and HD down 1.18%.


The NASDAQ composite dropped by 1.21% and closed at 14660.58. NASDAQ is up 1.12% over five days, up 0.95% over one month, up 4.05% over 3 months and up 40.94% over one year.

Leading stocks were INTZ up 52.07%, SGOC up 29.56%, BVXV up 26.94%, EYEG up 20.83% and IRCP up 20.37%.

Trailing stocks were SKYT down 45.43%, BTBT down 33.60%, INFI down 31.53%, NAOV down 22.63%, and NCTY down 22.24%.


The MidCap SP400 dropped by 0.57% to close at 2660.58. The SP400 is up 0.70% for the past 5 days, down 1.23% for the past month, down 3.68% for the past 3 months and up 43.91% over the past year.

Leading stocks were RGEN up 9.89%, XRX up 5.04% and KNSL up 4.44%.

Trailing stocks were CVLT down 9.35%, JBLU down 6.91% and AM down 6.69%


The SmallCap SP600 dropped by 0.85% to close at 1318.72. The SP600 is up 0.64% for the past 5 days, down 3.74% for the past month, down 3.10% for the past 3 months and up 54.16% over the past year.

Leading stocks were USPH up 17.38%, AAB up 8.69% and PETS up 5.39%.

Trailing stocks were AMEH down 12.37%, NBRWF down 11.72% and HLX down 9.98%.


The CBOE VIX is up by 10.13% and closed at 19.36. The VIX is down 1.88% over five days, up 20.85% over one month, down 10.25% over three months and down 23.90% over one year.


On the New York stock exchange 1183 stocks advanced and 2108 declined, while on Nasdaq 1198 advanced and 3162 declined.

There were 98 new 52 week highs and 65 new 52 week lows on NYSE with 58 new highs and 241 new lows on NASDAQ.


The 2 year Treasury note yield is 0.207% and 10 year is 1.247%. The 10 year yield is up 2.3% over five days, down 22.5% over one month, down 37.3% three months ago, and up 66.6% one year ago.


SP500 Sector Performance % change

Utilities +1.72

Real Estate +0.82

Health Care +0.44

Consumer Staples +0.22

Materials +0.14

Financials +0.05

Industrials -0.53

Information Technology -1.01

Energy -1.01

Communication Services -1.06

Consumer Discretionary -1.16


Utilities has been up 2.06% over five days, up 5.47% over one month, up 1.73% over three months and up 10.58% over one year.

Consumer Discretionary has been up 1.86% over five days, up 2.76% over one month, up 2.85% over three months and up 31.50% over one year.


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