Stocks ended higher last week as earnings season kicked off and investors digested a busy week of macro data. The big bullish catalyst came from global central banks. The U.S. Fed and the European Central Bank (ECB) made dovish comments which prompted buyers to return from a 4-week hiatus.
First, Janet Yellen softened her slightly hawkish stance when she gave a dovish testimony on Capitol Hill. Second, the ECB said it is ready to print money (continue QE) for the next few years. This was a bullish one-two punch that helped buyers return to the market.
Earnings season officially kicked off last week and a slew of companies will be reporting over the next several weeks. Remember, in addition to analyzing the data, we focus more on how the market reacts to the data. Three of the big banks opened lower on Friday after reporting earnings: Wells Fargo (WFC), JP Morgan (JPM) and Citigroup (C). So far, that is not ideal but we’ll see how it plays out over the next few weeks.
A Closer Look at What Happened Last Week…
Mon-Wed Action:
Stocks closed mostly higher on Monday as investors prepared for earnings season. Amazon’s stock (AMZN) jumped nearly 2% as the company got set for its big Prime Day sales. Prime Day features big deals for Amazon’s Prime customers and tries to encourage non-prime members to join prime. Needless to say, Prime Day was a huge success for the company.Â
On Tuesday, stocks ended higher in a volatile session after Donald Trump Jr. released a chain of emails that showed direct connection with a Russian lawyer. Intra-day, the Dow fell about 100 points but recovered by the close. Minneapolis Fed President Neel Kashkari said U.S. banks are still too big to fail which barely moved the needle.
Stocks rallied nicely on Wednesday after Janet Yellen gave dovish testimony on Capitol Hill. Yellen basically said the Fed is ready to shift back to easy money policies if conditions deteriorate. Big money also flowed into a slew of beaten down tech stocks as they come back into play.
