The Market Week Ahead: July 1 – July 5

 

July 1, 2019 – This week started with a bump from President Trump and Chinese Premier Xi agreeing to re-open trade talks, but the bump was pretty short lived as stocks opened at their highs for the day and proceeded to spend the rest of the day giving up ground. 

While it is certainly true that the resumption of talks is a positive sign, as there definitely won’t be a deal if there are no talks, the market’s seeming skepticism about the success of the talks also seems warranted. Not only did the previous round of talks go on for months, but the administration assured the public on multiple occasions that progress was being made toward a deal before eventually emerging without one. 

The U.S. has claimed the Chinese attempted to go backwards on issues that had already been agreed to, but it was President Trump who raised tariffs on $200 billion of goods imported from China to 25% from 10% while the last round of talks was still ongoing. 

Regardless of which side is to blame for the breakdown that ended the last round of negotiations, the new talks will have to revisit issues that seem potentially resolvable. A deal that holds China to the standards the U.S. wants on issues like intellectual property controls and an enforcement mechanism while also giving China what it wants seems like a very big ask. 

We fully expect to hear a lot more about the progress being made toward a deal, but expect each statement about that progress to be treated less seriously than the last, as we’ve down this road on enough issues that credibility starts to be a real problem for the administration. 

Tech stocks managed to hold gains better than the broader indices Monday, in large part due to the lifting of restrictions on dealing with Chinese tech firm Huawei. This seems like another potential credibility problem, both inside the negotiating room and out, as the restrictions were said to be because Huawei posed a privacy and national security threat, but now apparently has become a bargaining chip.

Looking toward the rest of the week, we don’t expect much. A big surprise in Friday’s jobs report could spark some volatility, but most traders will be spending their week thinking about the July 4 holiday as much or more than the market. 

Economic Events this Week

Consumer and producer price indices are the high points this week, but it seems like it would take a big surprise to really cause much reaction in the market.

  • Monday
    • 10:00 a.m. – ISM Manufacturing Index
  • Wednesday
    • 8:30 a.m. – Trade Balance
    • 10:00 a.m. – ISM Non-Manufacturing Index
    • 10:30 a.m. – EIA Crude Oil Inventories
  • Friday
    • 8:30 a.m. – Nonfarm Payrolls
    • 8:30 a.m. – Avg. Hourly Earnings
    • 8:30 a.m. – Unemployment Rate
    • 8:30 a.m. – Average Workweek

Earnings Reports this Week

Lennar, Micron and FedEx are probably the most interesting reports this week, but the calendar is pretty light.  

Tuesday:

  • Before the bell: AYI
  • After the bell: None

Wednesday:

  • Before the bell: None
  • After the bell: None

Thursday:

  • Before the bell: None
  • After the bell: None

Friday:

  • Before the bell: None

Sector Analysis 

Strong Sectors past Month

These sectors are up 5% or more in the last 20 trading days:

  • Metals & Mining
  • Semiconductors
  • Oil Services
  • Gold Miners
  • Solar
  • Junior Gold Minders
  • Robotics and Automation
  • Steel
  • Materials
  • Biotechnology
  • Agribusiness
  • Technology
  • Medical Devices
  • Homebuilders
  • Aviation
  • Nasdaq 100
  • Energy
  • Multimedia and Networking
  • Consumer Discretionary
  • Industrial
  • Financial
  • Regional Banks
  • Banks
  • Health Care
  • Insurance
  • Oil & Gas Exploration
  • Retail
  • Coal
  • Broker-Dealers
  • Internet
  • Consumer Staples

Weak sectors past month

No sectors are down 5% or more in the last 20 trading days:

    Srong sectors past five trading days

    These sectors are up more than 3% in the last five days.

    • Semiconductors
    • Regional Banks
    • Steel
    • Robotics and Automation
    • Banks
    • Oil Services

    Weak sectors past five trading days

    These sectors are down 3% or more in the last five trading days.

    • Real Estate
    • Gold Miners

    Bobby Raines

    Bobby Raines

    Bobby Raines is the Managing Editor of the Market Intelligence Center. He has degrees in Mass Communications and History from Emory & Henry College. Bobby worked at a mid-sized daily newspaper before making a switch to covering the financial industry full time in the years leading up to the financial crisis. He has been a member of the Fresh Brewed Media team since 2011 and has served as a writer and analyst. You can write to him at braines@marketintelligencecenter.com or follow him on Twitter: @BRatMICenter.

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