- Last Monday, the markets had their worst day in two years.
- By Friday, the indexes had all bounced back, with the S&P 500 nearly breaking even.
- This week, the July CPI report on inflation comes out.
The stock markets had their worst day in two years last Monday but ended the week strong.
The stock markets went on a wild ride last week, as the S&P 500 and markets crashed last Monday in what was the worst day in two years. But by week’s end, the major indexes gained back most of what was lost, including the S&P 500, which nearly climbed back to even.
This week, the markets got off to a much better start with the Nasdaq and S&P 500 up after the opening bell. The Dow Jones Industrial Average and Russell 2000 were both down slightly on Monday.
This week, the markets prepare for another week of earnings, with some big box stores, Home Depot (NYSE:HD) and Walmart (NYSE:WMT) reporting this week, along with tech stalwarts Cisco Systems (NASDAQ:CSCO) and ON Semiconductor (NASDAQ:ON).
But the big news comes on Wednesday when the July inflation data via the Consumer Price Index is released. With the Fed hinting at rate cuts in September, the July inflation data will certainly have a major impact on what the Fed decides to do.
Wild Ride for S&P 500
This time a week ago, investors were stunned by the rapid and aggressive downward turn of the markets. The Nasdaq Composite had plummeted some 900 points when the markets opened last Monday, while the Dow Jones Industrial Average dropped more than 1,000 points.
By the end of the day, the Dow had dropped 1,034 points, or 2.6%, while the Nasdaq Composite was off 576 points, or 3.4%. The S&P 500 plunged 160 points, or 3%, while the Russell 2000 fell 70 points, or 3.3%.
There were several factors that caused the selloff, including disappointing manufacturing and labor market reports the previous week that suggested a slowing economy, an already overpriced stock market, an interest rate hike in Japan that sparked a selloff there and created global concerns, and some slowing corporate earnings.
But as often happens, investors started buying on Tuesday after the dip, looking for good deals. That momentum continued all week, and by Friday, the S&P 500 had clawed back to 5,344 — down just 2 points for the week. It was the fifth straight week that the S&P 500 declined, but it could have been a lot worse.
The Nasdaq climbed back to 16,745, down just 0.2% for the week, while the Dow was off 240 points, or 0.6%. The Russell 2000 wound up having the worst week, down 28 points, or 1.3%. For the Nasdaq, Dow, and Russell 2000, it was the second straight week of declines.
Inflation Data This Week
Earnings are slowing down as we move into mid-August, but there are some big retailers on tap this week, including Home Depot on Tuesday and Walmart and Ross Stores (NASDAQ:ROST) on Thursday. Their results could foretell trends in consumer spending and confidence.
Also, ON Semiconductors reports earnings on Tuesday, and that could be a catalyst for semiconductor stocks, depending on the results. In addition, tech giant Cisco releases its earnings on Wednesday.
But all eyes on Wednesday will be on inflation data, as the CPI is released in the morning. Inflation rates have dropped for three straight months, and a fourth good report in a row could potentially seal the deal for rate cuts in September.
Two other economic reports to watch later in the week include Retail Sales on Thursday, and Consumer Sentiment on Friday.