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US weekly: S&P 500 posts new high as robust earnings, recovery hopes boost sentiments

US weekly: S&P 500 posts new high as robust earnings, recovery hopes boost sentiments

Last updated: 24 Jul, 2021 | 11:58 am

US weekly: S&P 500 posts new high as robust earnings, recovery hopes boost sentiments

US markets dropped sharply on Monday, due to rebound in Covid-19 cases. Covid-19 cases have rebounded in the US, with the delta variant spreading quickly among those who are unvaccinated. The S&P 500 rebounded sharply on Tuesday, as value buying emerged. US stocks posted their biggest daily gain since March.

The index continued its rally on Wednesday, with robust corporate earnings and renewed optimism about economic recovery leading to a risk-on rally. On Thursday, tech stocks led the gains despite an unexpected rise in jobless claims. Weekly jobless claims rose to 419,000 higher than 368,000 in the last week.

All three major U.S. stock indexes closed at record highs on Friday, reversing Monday’s heavy losses. U.S. Treasury yields rose before a Federal Reserve meeting next week. 

Weekly US market stats with IND

Let’s see the major developments during the week:

Rise in delta variant cases spooks investors: The U.S. is reporting an average of about 43,700 new cases per day over the past week, nearly three times as high as the level two weeks ago. The delta variant is spreading across those who are not vaccinated. About 68% of the adult population in the US is at least partially vaccinated. Following the concerns, the Russell 2000 Index was down 10% from its closing high on March 15, marking its first correction in more than one year. There are also concerns that the economy has passed its peak, which is leading to bouts of market anxiety.

Robust earnings lead to rebound: Many of the top US companies have reported better than expected results in the Apr-Jun 21 period. Earnings beats at midweek from Verizon Communications, Coca-Cola, Johnson & Johnson, and United Airlines seemed to provide a general boost to sentiment. Twitter and Snap’s robust earnings helped drive gains in communication services stocks. Netflix shares fell sharply on Tuesday, however, after the company reported a larger-than-expected decline in subscriber gains. While there were gains, the advance was somewhat narrow, with much of the gains concentrated in FANG+ stocks.

US-listed Chinese stocks plunge: Fears of increased regulation from China led to a deep fall in U.S.-listed Chinese stocks on Friday. The Chinese government has reportedly crackdown on private educators.U.S. shares of TAL Education Group and New Oriental Education & Technology Group Inc,  which provide tutoring and test preparation services in China, plunged more than 50% after news that the government is going to bar these companies from tutoring to earn profits. The Chinese government is reportedly looking to ease financial pressures on families. The financial burden of paying a very high cost for education has led to lower birth rates in the country. Last month, the Chinese government released measures aimed at encouraging births and lowering child-related expenses. 

Oil prices decline:  Oil prices ended flat in the week, after OPEC+ reached a deal on Sunday to phase out 5.8 million bpd of oil production cuts by Sep 2022. The development comes after Brent crude gained more than 40% in the year so far. Energy stocks were especially weak, as oil prices suffered their biggest daily decline since April 2020 after OPEC and other major oil exporters decided to increase output.

Check out our other analysis on important market developments!

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