Stocks made a valiant bid for a rebound on Friday, boosted by a sign that consumers haven’t thrown in the towel.
The Commerce Department said this morning that retail sales rose 1% month over month in June. While most of the increase was the result of higher gasoline and food prices, Wall Street was still pleased that the figure marked an improvement from May’s modest decline and was above the consensus estimate by economists for a 0.9% increase.
“Spending was widespread and not just spurred by more money being spent on gasoline,” says Jeffrey Roach, chief economist for independent brokerage LPL Financial.
“Given this report, the United States could actually post positive growth numbers for the second quarter and avoid two consecutive quarters of negative growth,” Roach adds. “The Fed could try to use this data to support a bigger than expected rise later this month. Right now the Fed is focused on the data and if the consumer is stable enough, the Fed could indeed implement a big hike without breaking the economy.”
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In other economic news, the University of Michigan’s preliminary consumer sentiment survey for July rose to 51.1 from June’s all-time low of 50.0, as industrial production edged higher. contracted 0.2% in June, its first month-over-month decline this year.
Financials (+3.4%) led the charge, with positive earnings reactions for Citigroup (C, +13.12%) and Wells Fargo (WFC, +6.2%) triggered a large rally in banking stocks.
At the close, the Dow Jones Industrial Average (+2.2% to 31,288), S&P 500 Index (+1.9 to 3,863) and Nasdaq Compound (+1.8% to 11,452) were all higher. However, on a weekly basis, all three major benchmarks ended lower.
Other news on the stock market today:
- Small cap Russell 2000 jumped 2.2% to 1,744.
- U.S. Crude Futures rose 1.9% to settle at $97.59 a barrel.
- Gold Futures Contracts fell 0.1% to close at $1,703.60 an ounce.
- Bitcoin continued to rebound, gaining 2.6% to hit $21,138.36. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.)
- UnitedHealth Group (UNH) was the best Dow Jones stock today, jumping 5.4% after earnings. In the second quarter, UNH reported earnings of $5.57 per share on revenue of $80.3 billion, beating analyst consensus estimates for earnings of $5.20 per share on 79.7 billions of dollars in sales. “Encouragingly, the UNH medical care ratio edged down 50 basis points quarter-over-quarter to 81.5% as COVID-19 activity moderated and is expected to support an improvement in profitability over time,” said CFRA Research analyst David Holt, who maintained a strong buy rating on the stock. “We believe UNH is entering the second half of the year from a strong position, with momentum in its transition to value-based care, particularly with further integration of pharmacy-related services. UNH’s capital positioning also remained strong in the second quarter, at $6.9 billion (1.3x net income), leaving ample flexibility to add physicians to Optum Health and maintain attractive returns for physicians. shareholders through dividends and buyouts. »
- pinterest (PINS) climbed 16.2% after a report in The Wall Street Journal said Elliott Management has built more than 9% in the business. The activist investor has had plenty of exposure to social media companies, having previously held positions in Twitter (TWTR) and eBay (EBAY).
- Speaking of Twitterthe stock jumped 3.2% before appearing on next week’s earnings calendar.
How to choose a mutual fund
“Are we there yet?” That’s the question many may be asking right now after a first half in which inflation, the Fed’s tightening cycle and the stock market have us in a rat race, say Carl Kaufman, Bradley Kane and Craig Manchuck, managers of the Osterweis Strategic Income Fund (OSTIX).
“Naturally, investors are eagerly awaiting better news — hard evidence that we’ve ‘gotten’ to the bottom of it all,” they say. “The stakes are high, as the specter of recession hangs over the economy as we try to figure out where we stand, but unfortunately the answers are not a simple yes or no.”
Investors looking to find calm in uncertainty may want to leave the wheel to knowledgeable and experienced managers. There’s no shortage of mutual funds, including Kiplinger’s favorite low-cost offerings to meet almost any portfolio need. And while sifting through the multitude of options available is one of the hardest parts of choosing a mutual fund, there are several steps to take to see what’s best for you. Keep reading as we show you the best way to narrow the field.