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How The Markets Fared In July

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How The Markets Fared In July
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July signaled the start of the third quarter, as we entered the second half of the year. The year has thus far panned well for the markets, with equity markets making new highs for the year on multiple occasions.

Fairly robust macroeconomic conditions, strong corporate earnings growth and a Fed, which is committed to preserving the economic momentum, have all worked in unison to lift the averages higher.

Here is how the different asset classes fared in July:

Equities On Tear

  • Dow Jones Industrial Average 2 Minute: +2.54 percent.
  • S&P 500: +1.93 percent.
  • NASDAQ Composite: +3.38 percent.

The Dow Industrials closed July at a record 21,891.12, although it has augmented its gains on the first day of the month of August and is inching closer to the psychological barrier of 22,000. Meanwhile, the S&P 500 Index and the Nasdaq Composite, both, entered record territory on July 26, although they have been trading off the record since then.

The year-to-date showing of the markets has also been commendable.

^DJI Chart
Source: Y Charts

Telecoms Lead The Way; Industrials, Laggards

  • S&P 500 Health Care (Sector): +0.67 percent.
  • S&P 500 Information Technology (Sector): +4.27 percent.
  • S&P 500 Financials (Sector): +1.61 percent.
  • S&P 500 Materials (Sector): +1.36 percent.
  • S&P 500 Industrials (Sector): +0.01 percent.
  • S&P 500 Consumer Staples (Sector): +0.40 percent.
  • S&P 500 Consumer Discretionary (Sector): +1.76 percent.
  • S&P 500 Utilities (Sector): - +2.51 percent.
  • S&P 500 Telecommunication Services (Sector): +5.07 percent.
  • S&P 500 Real Estate (Sector): +1.12 percent.
  • S&P 500 Energy (Sector): +2.44 percent.

See also: S&P Snubs Snap Due To Its Dual Class Shares

Bond Market Remains Steady

The yield on the benchmark 10-year U.S. Treasury bond was little changed over July, slipping to 2.29 percent at the end of July from 2.30 percent at the end of June. With the Fed sending conflicting signals concerning the path of the monetary policy, the bond market has been in a limbo.

Consequently, bond prices remained flat over the month.

In a rising interest rate environment, bond prices fall, sending yields on it higher.

After hitting a record low of 1.37 percent in July 2016, bond yields have staged a steady recovery amid the Fed rate hike chatter and subsequently, the beginning of interest rate normalization.

Going forward, bond yields are likely to rise to 2.60 percent by the end of the third quarter, with a move to 2.80 percent is also likely, the CNBC reported, quoting George Goncalves, head of rate strategy at Nomura.

Bulls Take Hold Of Crude Oil Market

The WTI grade crude oil ended July with a gain of about 9 percent to $50.17. This marked the biggest monthly percentage advance since April 2016. Oil ended July at its highest level in over two years.

The bullishness in the oil market is traced back to plans by U.S. oil giants to slash capital expenditure, which will impact production going forward, declines in the U.S. stockpiles and OPEC production cuts.

Gold Added Modest Luster

Gold ended July with a modest gain of 2 percent at $1,266.60 a troy ounce. Earlier in the month, the yellow metal slid as much as 2.6 percent before recovering the lost ground. Dovish comments by Fed officials, including Fed Chair Janet Yellen's Congressional testimony, put pressure on the dollar, sending the dollar-denominated gold higher for the month.

Dollar In The Dumps

The U.S. dollar index, which measures the strength of the buck against a trade-weighted basket of six major currencies, declined 2.88 percent in July, marking the fifth straight month of declines.

The dollar weakness stemmed from policy uncertainties amid fluid political environment in the U.S. and tempered hopes concerning Fed rate increases.

Given that the markets have not seen much of volatility in July should be good news for the prospects in the second half. August has also started on a firmer footing. Will the markets send investors laughing all the way into the bank?

Posted-In: CNBC News Commodities Events Economics Markets Tech Media Best of Benzinga

 

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