Stocks were trading slightly higher this morning (Dow +111 pts; SPX +.2%), but both major indexes are likely to end lower for August. Yesterday’s market optimism, attributed to easing trade war tensions, continued into today’s session. Consumer Discretionary, energy, and technology sectors are down this morning. Industrials, materials, and utilities are positive. The dollar is slightly weaker against a basket of foreign currencies, but higher against the Euro. Oil prices dropped, but gold is higher. Safe-haven Treasury bonds, as well as junk bonds, are flat to down on the day. The 10-year Treasury Note yield crossed back above 1.5%.
Earlier this week, the 2nd quarter U.S. economic growth figure was revised. A small revision of 2% from 2.1% is still well within historical norms. Investors who want this to be a significant data point will note that last years’ figure was above 3% for the same quarter. We also found out the job market is still strong – unemployment claims were about 215,000, well within the range that has been expected during this high employment period. One troubling detail in this month’s reports: home sales for current homes dipped 2.5% for July. The impact of the trade war is unclear, except for the U.S. industrial sector.
In stock news, as we mentioned earlier, ULTA reported earnings yesterday. It is still unclear as to whether their predicted growth slowdown is limited to the 2nd half of this year or a longer-term trend. The market, however, did not wait to make that distinction, making for the largest one day decline the company has experienced in years. Bucking that trend is the overall market – according to Deutsche Banks; Jim Reid, U.S. firms increased about 2.1% in the 2nd quarter over the first quarter of the year, and are up 2.7% year over year. The overall market sentiment this month has also been negative, as only defensive sectors were positive this month: utilities, real estate, and consumer staples.