Stocks Power Ahead After Investors Embrace Soft-landing Scenario

Barry Adams
19 Jul, 2023
New York City

Stocks continued to retain upward bias and investors await corporate earnings.

Investors are increasingly taking a positive view of market gains this year and forecasting the delaying of economic slowdown. 

Investors are hoping that market gains in the second half may surpass previous expectations because of improving economic trends and earnings picture. 

Slowing inflation trend, resilient consumer spending, muted wage growth, better-than-expected corporate earnings and receding stress in the banking system are contributing to positive market sentiment. 

On the positive side, overall inflation has fallen sharply after energy prices plunged from the previous year but core inflation, which represents service inflation, still remains stubbornly high. 

Investors are also hoping that the Federal Reserve is nearing its rate hike regime and the strength in the labor market will prevent the economy falling into a recession. 

In domestic economic news, seasonally adjusted housing starts declined 8% from the previous month to 1.434 million, the U.S. Census Bureau reported Wednesday. 

Single family home starts declined 7% to 935,000 and multi-family unit starts fell 11.6% to 482,000.   

Building permits in June were at 1.44 million, a decline of 3.7% from the revised May rate of 1.496 million and 15.3% below the annual rate of 1.701 million in June 2022.

Housing starts in June were 1.434 million and 8.0% below the revised May estimate of 1.559 million and 8.1% below the revised rate of 1.561 million in June 2022.   

Home completions declined to 1.468 million, 3.3% below the revised May estimate of 1.518 million but 5.5% higher than the June 2022 rate of 1.39 million.   

 

U.S. Indexes & Yields 

The S&P 500 index traded higher 0.3% to 4,570.45 and the Nasdaq Composite futures edged up 0.3% to 14,391.64. 

The yield on 2-year Treasury notes decreased to 4.71%, 10-year Treasury notes inched lower to 3.78% and 30-year Treasury bonds edged down to 3.91%. 

Crude oil increased $0.88 to $76.62 a barrel and natural gas prices decreased 2 cents to $2.61 a thermal unit. 

 

Stock Movers 

Goldman Sachs Group Inc declined 0.3% to $336.85 after the company reported lower-than-expected adjusted quarterly earnings because of losses in real estate and GreenSky. 

The financial services company reported quarterly revenue of $10.9 billion and earnings of $1.22 billion or $3.06 a share, reflecting sharp decline in trading revenue and investment banking fees.  

Carvana Company soared 30.1% to $52.36 after the used automobile retailer said it struck a deal to lower its debt by $1.2 billion. 

The company said the deal will eliminate about 80% of its unsecured notes in 2025 and 2027. 

Joby Aviation Inc plunged 12.2% to $8.88 after JPMorgan Chase lowered its stock rating to "underweight" from "neutral" and analyst Bill Peterson added in a client note that the adoption of electric aircraft "will take much longer than currently embedded in bullish expectations."