Eagle Bites July 24th

News in the Market

On Thursday, July 20th, the Dow Jones Industrial Average increased for the 9th consecutive day in a row, making it the Dow’s best positive streak since 2017. Dow added 163.97 points to its average, indicating strong performance from constituents like Johnson & Johnson, which rose 6% and topped Wall Street’s estimates. However, technology stocks in the S&P 500 such as Netflix lagged behind after earnings reports were released, showing revenue fell short for Netflix, decreasing share prices by 9%. Tesla’s decline in automotive gross margins to spur increases in demand has also resulted in the stock price dropping by 9%. We can expect the market to trade in a mixed way after Tesla and Netflix’s earnings report release for the next week or two until more companies show growth in weeks to come.

US Retail Sales Data

Tuesday’s US Retail Sales print left a mixed message as the headline figure came in below expectations (+0.2% vs +0.5%E). Still, the more specific “control group,” which excludes vehicles, gas, and building materials, topped its forecasts by growing 0.6%. Overall, consumers are still strong. Amidst disinflation, employee pay raises are finally outpacing price appreciation, giving more buying power to the people. A resounding rebound in consumer sentiment via June’s UMich survey added further fuel to the market’s flame. 

Telecommunications Sector Continues Struggle

AT&T shares continue to drop to their lowest closing prices in three decades, due to their ongoing investigation into toxic lead cables being left behind by telecommunications companies. An investigation led by the Wall Street Journal found that telecom companies have left behind over 2,000 lead-encased cables all across the United States. After testing those cables, the WSJ found that lead had been draining into the soil and water. Shares of other telecom companies like Verizon, Frontier Communications, and Lumen Technologies also took a hit. Combined, these companies have altogether lost about $36 billion in market value since news of these lead cables have come out. Only time will tell how these companies will bounce back from these losses.

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