Stock Market Daily Report: Equities Retreat from Recent Peak Levels
In July 2022, the U.S. economy and financial markets showed a mix of positive and negative trends.
Inflation Expectations Remain Elevated
Short-term U.S. inflation expectations were elevated in July 2022, reflecting the high current inflation rates. While there is no direct data for July 2022 inflation expectations, related information suggests that short-term expectations were likely significantly above the Federal Reserve's 2% target. Long-term inflation expectations, however, generally remained more anchored around 2-3%, demonstrating confidence in the Federal Reserve’s ability to manage inflation in the longer run.
Economic Indicators
The Index of Consumer Sentiment increased to 61.8 in July from 60.7 in June, marking a five-month high. This positive trend indicates improved consumer confidence. However, the Index is still 16% below December 2021 levels, suggesting lingering concerns about the economy.
Housing starts increased by 4.6% month-over-month to an annual rate of 1.321 million in June, indicating a robust housing market. Contrastingly, building permits decreased by 4.4% year-over-year, indicating a potential slowdown in future construction activity.
Stock Market Performance
The Dow Jones Industrial Average shed 0.3% to close at 44,342, while the S&P 500 decreased less than a point to 6,296. The Nasdaq Composite eked out a 10-point gain to 20,895.
Corporate Earnings and Guidance
3M (MMM) reported 1.4% sales growth and raised its full-year guidance for earnings to $7.75 to $8.00. Despite beating expectations and raising its guidance, MMM gapped down at the opening bell and ended the day down 3.6%, with the updated guidance reflecting the impact of Trump's tariffs.
Netflix (NFLX) also beat expectations for its quarter, raised guidance for the full year, and gapped down at the opening bell, ending the day down 5.1%.
Cryptocurrency exchange operator Coinbase Global (COIN) hit a new all-time high and closed up 2.2%. COIN is a top holding in some of the best bitcoin ETFs to buy for efficient exposure to a rapidly expanding but still relatively small asset class.
Bitcoin traded at a 24-hour high of $120,689 and hit a new all-time high above $123,000. The total value of the cryptocurrency market exceeded $4 trillion.
Leading Companies' Performance
The leader of the AI revolution, Nvidia (NVDA), made a new intraday high and is up 27.9% since its fiscal 2026 first-quarter earnings report. Nvidia (NVDA) became the first publicly traded company to cross the $4 trillion market capitalization barrier.
Conclusion
In July 2022, the U.S. economy and financial markets showed a mix of positive and negative trends. Despite elevated short-term inflation expectations, long-term expectations remained relatively stable. The housing market showed strength, while there were signs of potential slowdown in future construction activity. The stock market showed mixed performance, with some companies like 3M and Netflix underperforming despite beating expectations and raising guidance. The cryptocurrency market continued its expansion, with Bitcoin hitting new all-time highs. The AI sector, represented by Nvidia, continued to thrive.
- Investors might consider exploring alternative investment options beyond the stock-market, such as cryptocurrencies, given Bitcoin's continuous growth and the total value of the cryptocurrency market surpassing $4 trillion in July 2022.
- While the U.S. housing market appeared robust in July 2022 with an increase in housing starts, there were indications of a potential slowdown in future construction activity as building permits decreased year-over-year.
- Although some companies like 3M and Netflix beat earnings expectations and raised their guidance, they experienced a lower opening on the trading market in July 2022, suggesting that there may be other factors influencing their performance beyond their financial health.
