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Posted on July 30, 2018

Weekly Market Commentary July 30, 2018

Market Commentary

Strong U.S. economic growth made additional interest rate hikes likely. The likelihood of additional hikes and weak earnings from a couple key technology companies was not enough to overcome positive news earlier in the week on trade between the Europe Union and U.S. Discussions are moving forward to rescind the announced metal tariffs and reduce tariffs on industrial goods. The S&P 500 rose 0.6% for the week. Global stocks, as measured by the MSCI ACWI, climbed 0.9% higher. The Bloomberg BarCap Aggregate Bond Index dropped 0.2%.

Key points for the week

  • U.S. GDP rose 4.1% as strong consumer spending and a rush to buy soybeans ahead of tariffs pushed growth higher.
  • The U.S. and European Union moved toward resolving certain trade disputes.
  • Facebook’s earnings report disappointed, and the stock set a new record for value lost in a single day.

GDP Exceeds 4% in Second Quarter

U.S. gross domestic product rose at a 4.1% annualized rate in the second quarter. The strong growth was boosted by heavy consumer spending and Chinese buyers stocking up on soybeans ahead of tariffs. Excluding the boost in exports, the underlying growth story remained very strong. Sales to private domestic buyers rose 4.3%. This measure excludes the more volatile categories of trade, inventories, and government spending and provides a core estimate of economic strength. The strong economic performance was expected and reinforced expectations the Federal Reserve would continue to raise rates at a steady pace.


Fun Story of The Week

DMV in Cleveland tapes a photo of LeBron to their camera

The DMV is a place of many rules, but the one that most often requires reiteration is no smiling in the driver’s license picture. One DMV in Cleveland decided to guarantee adherence by placing a picture of Lebron James in a Lakers jersey under the camera. Lebron James, one of the world’s most famous athletes and a hometown hero, recently left the Cleveland Cavaliers for the Los Angeles Lakers, leaving Cleveland fans heartbroken. Not much to smile about.