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Market Update 07/17/23

Hashim Effendi

Markets rose between July 11 and July 17 as investors remained optimistic about a potential slowdown in the Federal Reserve’s fight to control inflation.

They gained traction on Tuesday as investors remained optimistic concerning key inflation data and second-quarter earnings. The Dow Jones Industrial Average rose 0.9%, the S&P 500 0.7% and the Nasdaq composite rose 0.6%.

The Chicago Board Options Exchange’s Volatility Index fell 1.53% to a value of $14.84. The CBOE Volatility Index serves as a gauge for investor sentiment associated with equity markets.

The Energy Select Sector and Communication Services Select Sector were Tuesday’s largest gainers, adding 2.2% and 1.7%, respectively.

The three indexes closed in the green on Wednesday following the release of the Consumer Price Index reading for June. The Dow increased 0.3%, the S&P 500 increased 0.7% and the technology-heavy Nasdaq increased 1.2%.

The CPI rose 0.2% in June over the previous month. Core CPI, which excludes fluctuations in energy and food costs, also rose 0.2% month-over-month. The relatively low increase in inflation led investors to feel more optimistic about a forthcoming slowdown of Fed rate hikes.

The Utilities Select Sector and the Materials Select Sector gained 1.5% and 1.3%, respectively. The CBOE Volatility Index declined 8.76% to $13.54.

Stocks gained on Thursday after the Producer Price Index affirmed the slowdown of inflation. The Dow added 0.1%, the S&P 500 added 0.9% and the Nasdaq added 1.6%.

The Bureau of Labor Statistics announced that the PPI rose 0.1% month-over-month in June, beating analysts’ expectations of 0.2%. Positive inflation data bolstered investor confidence regarding a slowdown of Fed rate hikes.

The Department of Labor reported that jobless claims declined from 12,000 to 237,000 for the week ended July 8.

The Communication Services Select Sector and Technology Select Sector increased 1.5% and 1.3%, respectively. The CBOE Volatility Index rose 0.52% to $13.61.

Markets closed mixed on Friday following a slew of second-quarter earnings releases. The Dow gained 0.3%, the S&P 500 lost 0.1%, and the Nasdaq lost 0.2%.

The CBOE Volatility Index fell 2.0% to $13.34. By Friday’s close, the Energy Select Sector and Health Care Select Sector were the biggest losers, declining 2.6% and 1.5%, respectively.

Stocks rose on Monday due to strong inflation data and second-quarter bank earnings from the previous week. The Dow rose 0.2%, the S&P 500 rose 0.4% and the Nasdaq rose 0.9%.

Investor sentiment concerning bank stocks improved as banks reported resilient earnings and consumer borrowing. Shares of $WFC and $JPM gained 2.7% and 2.4%, respectively.

Investors should remain vigilant as numerous mega-cap banks report earnings in the upcoming week. Regional bank stocks, which are mispriced by the market, may denote a robust investment for the time being.

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