Week of August 2, 2021
The market had a lot of data to digest last week with several mega cap technology companies reporting earnings and the gross domestic product report of economic activity. The market direction was mixed as earnings came out generally exceeding expectations, but GDP missed by a considerable margin. Although GDP improved from the 6.3% posted in the 1st quarter to 6.5% in the 2nd quarter, it fell short of the 8.4% expected growth. Personal consumption expenditures grew 11.8% in the 2nd quarter, up from 11.4% in the 1st quarter.
The S&P 500 lost 0.4% last week, weighted down by consumer discretionary and communications services sectors, but posted an impressive 2.3% gain for July. Consumer discretionary led to the downside losing 2.6% for the week, followed by communications services dropping 1% and technology losing 0.7%. The materials sector led to the upside gaining 2.8% with energy up 1.6% and financials posting a gain of 0.7%.
The COVID variant seems to be weighing on the economic recovery, causing the Federal Reserve to pay close attention to reopening efforts. Labor, or lack thereof, is slowing the reopening efforts of much of the hospitality sector. It is expected that once the federal unemployment benefits expire in September the labor force will see a strong return to the job.