A dovish Fed along with good results from US companies for the second quarter seems to have sustained the bull market on Wall Street. As a result, the stock market bulls still seem to be in control of the situation.
U.S. stocks rose on Friday, with the Dow Jones crossed the 35,000 point mark and seems to be on track to set a fourth straight week of gains as investors embraced strong retail sales data, better-than-expected financial results from State Street dovish comments from Federal Reserve Chairman Jerome Powell. This week, Powell signaled that the central bank will continue to support the U.S. economy until the employment target is met, saying that inflationary pressures are seen as temporary and the current monetary policy stance remains appropriate for now.
U.S. retail sales, mentioned above, rose 0.6 percent month-over-month in June 2021, following a revised 1.7 percent decline in May and easily beating market expectations for a 0.4 percent decline. Sales rose at electronics and appliance stores, gas stations, clothing and apparel accessory stores, general merchandise stores, variety stores, and restaurants and bars. Motor vehicle sales, however, fell 2.0 percent as a global supply shortage of semiconductors hit manufacturing. Excluding automobiles, gasoline, building materials and food services, retail sales rose 1.1 percent last month, after falling 1.4 percent in May. This is very good news from the U.S. economy, which is primarily consumption-based.
Also, good sentiment seems to be prevailing in European stock markets as the earnings release season begins. Cartier brand manufacturer Richemont reported Q1 sales more than doubled from a year earlier, boosted by a strong performance from its jewelry brands, and fashion company Burberry announced that it had made an excellent start to the new year, reporting accelerating full-price sales and strong growth in leather goods and outerwear. Meanwhile, Swedish telecommunications giant Ericsson reported results slightly below market estimates due to a decline in sales in mainland China.
Since the beginning of July, the Nasdaq 100 Index appears to be up more than 2 percent, the S&P 500 Index is up more than 1.7 percent, the Dow Jones is up 1.5 percent and the German DAX is up about 0.65 percent.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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