Julex Market Weekly 07-28-2013 | US Markets Remained Flat as Investors Became Cautious

Top Stories Last Week

• US Markets Remained Flat as Investors Became Cautious

US stocks were flat after they reached new record highs last week, as investors were cautiously waiting for more significant economic news, scheduled to be released this week. In the week, S&P index was flat, and MSCI EAFE index climbed 0.2%. The MSCI Emerging Market Index rallied by 1.3%. Gold continued to rally by 2.9%. The SPGC commodity index lost ground, down by 2.3% as oil prices declined. The bond markets declined again. Barclays US Treasury index was down by 0.6%, and US high yield bonds dropped 1.2%.

• Apple and Facebook Rallied on Better-than-expected Earnings

Facebook surged 30%, its best daily percentage rise in its short history, after reporting a $333 million profit as revenue rose more quickly than anticipated. Times were tough for Facebook’s partner Zynga, maker of Farmville and other games, which saw its stock dive about 15% after disappointing results and an announcement it won’t get into the gambling business. Apple’s profit dropped by 22%, which was less than feared as more iPhones were shipped than expected, despite at a lower price. Shares of Apple rose nearly 4% in after-hours trading.

• US New Home Sales Rose 8.3% in June

Sales of new U.S. homes rose more than forecast in June to the highest level in five years, a sign builders are benefiting from a lack of supply of existing properties. Purchases climbed 8.3% to an annualized pace of 497K homes, highest level since May 2008. The median estimate called for a gain to 484K. The gains will keep propelling residential construction and home values, giving the world’s largest economy a boost. Growing employment and the desire to take advantage of historically low borrowing costs before they rise further will probably release pent-up demand from consumers who had held off during the recession and early stages of the expansion.

• US Durable Goods Orders Jumped 4.2%

Orders for durable U.S. factory goods rose in June, boosted by a surge in aircraft demand and more business spending. The increase suggests companies are more confident in the economy and could bolster economic growth in the second half of 2013. The orders for durable goods increased 4.2% in June. That followed a 5.2% gain in May, which was revised higher. Most of the gain occurred because aircraft orders, which are volatile month to month, jumped 31.4%. Orders that reflect planned business investment, excluding volatile transportation and defense orders, increased in June for the fourth straight month. The 0.7% gain last month was buoyed by more machinery demand. And orders in May were much stronger than previously reported.

Top Stories to Watch This Week

• Fed, ECB and BOE Meetings

The Federal Reserve, European Central Bank and Bank of England will hold policy meetings. They all are expected to keep the monetary policies unchanged. Investors will watch closely on the statements to get hints on the possible changes of policies going forward.


The advanced estimate of US Q2 GDP will be released and is expected to grow by 1.2% YOY.

• US Nonfarm Payrolls and Unemployment

The US employers are likely to add 184K jobs in July and unemployment is expected to drop to 7.5%.

• US ISM Index

The US manufacturing sector is expected to continue expansion, with ISM index to improve to 51.5.

• China’s PMI Index

The official PMI survey will show if there is any improvement in the China’s factory sector.

• More Earnings Reports

It’s the last heavy week of earnings season, with five Dow components and 135 of the S&P 500 companies expected to report this week. Big oil names, including BP, Occidental Petroleum, Exxon Mobil, Conoco Philips and Chevron will report quarterly earnings. A number of big automakers are reporting: Chrysler/Fiat, Honda, Toyota Motor. Pharmaceutical giants Merck and Pfizer are both out Tuesday morning.