The equity markets turned in a (relatively) solid performance this week closing +2.0% on the Dow, +2.6% on the S&P and +3.3% on the NASDAQ. Second quarter earnings season is underway, and this week saw several bellwether companies reporting. The market applauded results from GS, NFLX, CSX, TSLA, ABT, AAL, PM, DHR, NEE. The market did NOT smile so much on results from JNJ, IBM, VZ, and SNAP. Semiconductor names this week got a boost after the Senate Tuesday voted to advance a $52bn bill aimed at increasing domestic semiconductor production to ease current and prevent future supply chain disruptions. While the final bill may be less than this $52bn price-tag, semi names rallied on this news with the SOXX ETF (iShares Semiconductor ETF) closing up 5.8% for the week.
Also this week, the ECB (European Central Bank) surprised markets with a 50 basis point rate hike, its first in 11 years (as late as June there were signals were for a 25bps hike). The move served to strengthen the Euro (at least for now) against the U.S. dollar, with the EURO/USD rate ending the week above parity (or 1 for 1 Dollar per Euro) at ~1.02 after briefly trading below parity earlier in the week. Also out of Europe, Russia resumed gas flows to Germany after the Nord Stream 1 pipeline was shut-off for scheduled maintenance. This was welcome news by Western Europe as there were concerns that the scheduled shut-off could become permanent if Russia so desired.
For the remainder of this week’s write-up, I would like to include a link to a recent article in the New York Times from July 15, featuring M&R’S CEO, John Maloney. The article discusses the recent outperformance of energy in the face of falling global markets and how Europe, the world, and even energy companies themselves are trying to navigate the current environment of higher energy prices.
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