Top Story
Earnings season off to a great start
- Beat rates have been outstanding so far with 85% and 90% of S&P 500 companies beating earnings and revenue targets.
- Second quarter earnings growth is tracking to a nearly 70% year-over-year increase, already 6 percentage points ahead of July 1 estimates with just 42 index companies having reported.
- The average upside surprise for the 16 financial companies that have reported is a strong 27%, not far behind last quarter’s 35%.
- The S&P 500 Index earnings per share estimate for the next 12 months has already increased 0.5% in July to over $200 per share, evidence of continued strong earnings momentum.
Daily Insights
US equities opened lower to start the week following last week’s late week weakness
- The Dow Jones Industrials, S&P 500 Index, and Nasdaq Composite all snapped three-week winning streaks as concerns over inflation and the Delta variant spread worldwide mount.
- European markets are lower through midday trading as leaders in several countries are looking to reimplement social restrictions.
- Asian markets closed their sessions lower with Hong Kong (Hang Seng) down almost 2% as the number of COVID-19 outbreaks increase throughout the continent.
OPEC+ reaches agreement to boost output
- Over the weekend, OPEC and its allies agreed to a production increase of 400,000 barrels/day.
- The decision looks to offset cuts made at the start of the pandemic.
- WTI crude oil prices fell back below $70/bbl. on the news, underscoring the importance of the $77/bbl. resistance level that doesn’t look to be eclipsed any time soon.
Technical update
- The S&P 500 broke a three-week win streak, falling 1% last week.
- Downward momentum is continuing again this morning, with stocks, oil and bond yields all falling.
- Key support levels to watch this week include the 50-day moving average on the S&P 500 (4239), 2100 on the Russell 2000, 1.2% on the 10-year Treasury yield and $66/bbl. on WTI crude oil.
Week ahead
The following economic data is slated to be released this week:
- Monday—National Association of Home Builders Housing Market Index (Jul)
- Tuesday—Building permits and housing starts (Jun)
- Thursday—Weekly initial and continuing claims, existing home sales (Jun) and leading indicators (Jun)
- Friday—Markit Purchasing Managers’ Index (PMI, Jul)
Earnings season kicks into high gear this week with nearly 80 S&P 500 companies reporting results.
Midyear Outlook 2021 has launched. While the speed can be exhilarating as economic growth accelerates, it can also be dangerous. Midyear Outlook 2021: Picking Up Speed is designed to help you navigate the risks and opportunities brought upon by the economy’s reopening for the rest of 2021 and beyond. For more information, please read our Midyear Outlook 2021.
Street View Midyear Outlook 2021
In the latest LPL Street View video, LPL Financial Chief Market Strategist Ryan Detrick takes a closer look at what the LPL Research team thinks is coming in the second half of 2021, with a special focus on the economy, policy, stocks, and bonds.
Midyear Outlook 2021: Picking Up Speed
LPL Research provides an overview of their forecasts on the economy, policy, stocks, and bonds for the rest of 2021 and beyond. Learn more in this week’s Weekly Market Commentary.
Midyear Outlook 2021 Is Here: What Does LPL Research Think Is On the Horizon?
In this week’s LPL Market Signals podcast, LPL Research’s Chief Market Strategist, Ryan Detrick and Equity Strategist, Jeff Buchbinder discuss how to navigate the risks and opportunities brought upon by the economy’s reopening for the rest of 2021.
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