Markets moved mostly higher last week as the rally broadened away from Big Tech.
Only 18% of companies have reported 2nd quarter earnings so far and the results are a little lackluster. So far, 75% have reported earnings higher than estimates and 61% have reported revenues higher than estimates. That's below the 5-year average of 77%, with regard to earnings beating estimates. This week, we will get what is expected to be a rate hike from the Fed at the conclusion of the FOMC meeting on Wednesday. The implied Fed Futures are showing near 100% probability of such an outcome. And yet, investors continue to move into equities.
The equity rally to-date has been led primarily by Big Tech.
However, this past week, sectors not typically associated with momentum rallies moved higher. Energy, Financial Services, and Healthcare led the way as the Dow Jones Industrial Average notched its 10th consecutive daily positive return, which has not happened since August of 2017. For the first time in 2 years, wages are finally keeping pace with inflation, which is good news for further equity growth. The economic data this week could confirm the health of the U.S. consumer as both Personal Spending and Personal Income are expected to show growth. For now, the equity rally is still on.
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