Last week, major US indices continued to correct. So the S&P 500 fell 0.4%, while the NASDAQ 100 lost 1%. Nevertheless, at the end of July, the indices rose by 1.8% and 2.8%, respectively, and since the beginning of the year the indicators have added 16-17%. The reporting season remains the focus of traders’ attention. The profit of 89% of S&P index companies, which have already reported results, exceeded analysts’ expectations. The largest tech companies released their quarterly earnings last week. Thus, the results of Microsoft, Facebook and Google and Apple were significantly better than market expectations, while the reports of Amazon disappointed investors. The company’s revenue fell below market consensus.
The Federal Reserve said last week that the US economy is continuing to recover despite renewed increases in COVID-19 incidence, so the Fed has no intention of rushing to phase out stimulus. The Fed kept its base rate in the range of 0-0.25% per annum and promised to continue monthly asset repurchases totaling $ 120 billion “until significant progress is made towards the goals of maximum employment and price stability.” Fed officials have indicated that they have made progress in discussing a reduction in asset buybacks, but still have not decided when to start cutting back. Fed Chairman Jerome Powell noted that the rise in US inflation is temporary, and once the economy returns to normal, consumer prices are likely to decline. The market reacted neutrally to the Fed meeting.
The US economy grew 6.5% in the second quarter at an annualized rate, preliminary data from the US Department of Commerce showed. The result was worse than the average forecast of analysts polled by Trading Economics, who expected growth at 8.5%. The Wall Street Journal respondents predicted an even more significant rise – by 9.1%. GDP in the first quarter, according to revised data, grew by 6.3%. Earlier it was reported an increase in this indicator by 6.4%. The number of Americans applying for unemployment benefits for the first time last week fell by 24 thousand to 400 thousand, according to a report from the US Department of Labor. Analysts on average expected a decline to 380 thousand from the previously announced level of the previous week. The reduction in the number of applications suggests that the spread of the new strain of COVID-19 “delta” has not yet had a significant negative impact on the economy.
On Monday, the US enters into force a law banning investments in 59 Chinese companies that are related to the military and surveillance systems industry of the PRC. On Tuesday, the June US statistics on orders for manufactured and durable goods will be published. On Wednesday, the statistics on the US labor market for July from the ADP agency will be published. On Thursday, the Bank of England will decide on a key rate. According to the consensus, the regulator will keep the rate at the current level. Finally, the July US labor market data pack will be released on Friday. The labor market figures are very important for the market, because once published, the Fed can signal the market about changes in monetary policy.