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Last week was “all-hands-on-deck,” as over 100 of the S&P 500 companies reported earnings. Earnings to date have been very positive, with 86% beating top-line expectations. If this trend continues, it will mark the highest number of companies beating expectations since 2008. Additionally, Q2 estimates have broadly been revised higher, which runs contrary to the norm of pessimism increasing as the year proceeds.
Energy, Communication Services, and Financials were the leaders during the week, returning more than +2.4% each. Dragging the index was tech, which showed weakness across all industries. Hardware companies had the hardest time, as supply chains are still strained past their limits.
Jobs data came in weaker than expected. Initial weekly jobless claims rose to 553k vs. 540k expected and 547k from the previous week. Additionally, “Pending Home Sales,” missed expectations, although they did grow, alongside personal income, spending, and consumption. That said, the University of Michigan’s survey that tracks personal sentiment and future expectations of the economy beat estimates showing robustness by the US consumer.
Consumers and investors, alike, tuned into FED Chairman Jerome Powell on Wednesday and listened intently for insights on how the FED was intending to manage current inflationary pressures. While Powell only noted “frothy” markets, the FED president has since opined that tapering could start occurring sooner rather than later. In other words, the FED is slightly more likely to stop its bond purchasing program and low-rate policies sooner than most investors may be pricing in.
Finally, overseas, the Eurozone finds itself at a tipping point relative to GDP growth and recession. Europe’s export engine, Germany, is seeing contractions of activity, as the car market continues experiencing difficulties with the semiconductor shortage. These systemic issues are being balanced, thus far, by investor and consumer excitement for potential restriction lifts. Governments have been reluctant to open back up in the face of the vaccine rollout problems, but, as the rest of the world opens up, countries in the EU are doing their best to follow suit.
When so many factors continue to point in so many different directions, it is natural to lose focus and get anxious about which way to go. Not only are our Proud to Own portfolios hard at work, they are working towards good purposes. That is always the direction the Ambassador team wants your wealth and assets to go. Galatians 6:9 reminds us to, “…not grow weary of doing good, for in due season we will reap, if we do not give up.”
We feel confident that the near-term adjustments to the portfolio will put all of us in the position to continue to root for market success, while also maintaining a proper compass heading for the issues that are important to us.
Sources: Yahoo Finance, Reuters.com, and JP Morgan Market Insights
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