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Afternoon Note

Solid Economic Activity

By Charles Payne, CEO & Principal Analyst
8/5/2020 1:35 PM

It is another solid day for the market. Behavioral trends are getting a boost from fundamental trends, namely from this earnings season, which was slated to be a disaster. Instead, it is informing investors, especially those that missed this rally and are loath to chase.   Earnings are beating the street at a remarkable level.

2Q 2020 Earnings Trends

384 Reported

83%

Beat

15%

Missed

-32.1

Blended Average

-43.0%

Consensus

 

Technology has obviously benefited, but now investors are using these beats to justify moving into other areas of the market, especially value names.  Hence, the strong performance today.

2Q 2020 Earnings Trends

Best Sectors

94%

Tech

92%

Health Care

90%

Materials

89%

Industrials

 

Eight of the eleven S&P 500 sectors are in the green, as investors rotate once again out of safe haven stocks.

S&P 500 Index

+0.69%

 

Communication Services XLC

+0.32%

 

Consumer Discretionary XLY

+0.87%

 

Consumer Staples XLP

 

-0.16%

Energy XLE

+2.13%

 

Financials XLF

+1.50%

 

Health Care XLV

+0.47%

 

Industrials XLI

+1.36%

 

Materials XLB

+2.45%

 

Real Estate XLRE

 

-0.94%

Technology XLK

+0.36%

 

Utilities XLU

 

-0.75%

 

Crude oil inventories continue to come down on a larger than expected draw down.  We learned today that in the past week, there was more than seven million barrels drawn down, which is more than twice the expected 3 million decline.

 

More Positive Signs

ISM Services for July came in at 58.1 against consensus of 55.5 and up from 57.1 in June.

Business activity surged to 67.2 from 66.0 to reach the highest level since January.  Both ISM reads on manufacturing and services underscore solid economic activity.

ISM Non-Manufacturing 

 


Comments
Wonderful explanation of what is happening in the market. I appreciate it.


Joseph Pajak on 8/5/2020 2:13:28 PM
 

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