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Market Attributes: U.S. Equity Indices Get Howard Silverblatt's take on the latest monthly performance of the U.S. equity market.
BY Howard Silverblatt

• The S&P 500® was up 1.31% in July, bringing its YTD return to 18.89%.

• The Dow Jones Industrial Average® gained 0.99% for the month and rose 15.16% YTD.

• The S&P MidCap 400® rose 1.09% for the month and was up 18.26% YTD.

• The S&P SmallCap 600®returned 1.06% in July and 14.02% YTD.


“Up, up and away, my beautiful, my beautiful balloon.” In July, the S&P 500 was up 1.31% and gained 18.89% YTD, continuing June’s gains (6.89%) and posting 8 new closing highs in 22 trading days. The Dow Jones Industrial Average also joined in, adding four new closing highs. While June posted a rebound from May’s 6.58% decline, what propelled the market in July was a trifecta of events. First, the easing of the trade confrontation and temporary suspension of additional tariffs via a new series of negotiations with China. Second, the broad expectation of a U.S. FOMC interest rate cut, which occurred at month’s end, with many expecting another one this year, as Powell dampened hopes for an additional quick cut, resulting in the first daily 1% decline since May 31, 2019. Third, estimates for Q2 2019 were reduced (by 7.1%), permitting 73.9% of the 326 issues reported to beat estimates (déjà vu for the third time) and allowing the Street to declare victory. The true earnings supporter was the second half 2019 guidance, which, absent trade concerns and present the ever-spending consumer, is forecasting a record. The key question, of course, remains—is it a balloon? To that question, fundamentals have remained strong (a phrase typically used in a bear market by “officials” trying to talk up the market), as the U.S. continues to grow (albeit a bit slower than expected)—compared with Europe and many emerging markets where economies are declining (the S&P U.S. BMI was up 0.10% for July, but without the U.S. it declined 1.35%; year-to-date, it returned 14.77% and 9.95%, respectively). However, the price-to-earnings ratio was back to nearly 20, with corporations still holding back on investments over economic and policy concerns (even as capital expenditures near a record), as the 2020 election is in full bloom (and debate). The bottom line is that the S&P 500 lived through an intraday visit from the bear last December (we use the closing level for that classification) and a near correction in May, with July bringing new highs. With earnings estimates for the second half holding up (retail starts soon), and the U.S. Congress about to go into recess, a rocky market may continue, but it looks more like an upward rocky one.

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