Featured Market Data
Fed’s Last Hike?
The last week of July brought a mixed bag of economic data and comments from the Federal Reserve Chair. Inflation declined as measured by the Fed’s preferred measure of inflation, Personal Consumption Expenditures (PCE). The chart below shows PCE excluding food and energy, which declined for the month on a decrease in the price of goods. The week also brought the first look at second quarter GDP growth which exceeded expectations at 2.4% on stronger business investment. The Fed raised rates by 0.25% as Fed Chair Powell noted the Fed remains data dependent with respect to any future rate hikes. At PMA, we see only a small chance for further rates hikes while also expecting rates to remain higher for longer.
Source: www.bea.gov, Bloomberg
Recent News
Bumpy Earnings Results
Through July, more than half of S&P 500 constituents have reported second quarter earnings. Blended earnings growth (including actual results and estimated results for companies yet to report) shows projected year-over-year earnings growth of about -7.5%. The energy sector reported the largest YoY decline of -52% as oil prices declined. The materials and health care sectors also reported substantial YoY declines in earnings. Positively, six of eleven sectors are reporting YoY earnings growth, led by the consumer discretionary and communication sectors. Lower profit margins contributed to lower blended earnings growth across sectors and will be key to watch as inflation declines.
Source: FactSet
