Last updated: Apr-24-2018

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By Fund Library News Wire  | Tuesday, August 02, 2016

By Mike Keerma

Deep into the summer doldrums, the major North American markets turned in humdrum performance last week, as early strength in July following June’s Brexit vote in the U.K gave way to general indifference. Despite lacklustre performance over the last two weeks of the month, the S&P/TSX Composite Index advanced a relatively healthy 3.7% in July, but closed last week with a marginal weekly loss of -0.1% on declining crude oil prices. Likewise, the S&P 500 Composite Index edged down fractionally on the week, despite closing last Friday with its second-highest close ever, for weekly loss of 0.07%, while turning in another strong monthly gain of 3.6%. The Nasdaq Composite Index followed suit, as a 1.2% advance on the week sealed the deal for a monthly gain of 6.6%, as technology shares rallied following Alphabet Inc.’s (NASDAQ: GOOG) better-than-expected quarterly earnings report.

In the U.S., second-quarter gross domestic product expanded by a lackluster 1.2% year-over-year, putting paid to any hopes for a strong rebound from the first quarter’s equally lackluster 0.8% growth rate. Falling inventory levels accounted for much of the weakness in the second quarter. One positive sign was a 4.2% increase in consumer spending with both goods and services showing healthy growth. Taken together, these factors augur well for a resumption of GDP growth in the second half of the year.

The U.S. Federal Reserve Board’s Open Market Committee (FOMC) held interest rates unchanged, pretty much as expected, acknowledging that near-term risks to its projections for the economy have dropped slightly. Perhaps burned by its recent flip-flops on the rate outlook, the FOMC toed the party line, keeping the tone of its its commentary quite neutral, suggesting that any rate hike has probably been deferred to December at the earliest.

Canadian GDP for May put on an equally lacklustre showing, as output fell -0.6% from April, growing at an annual rate of only 1.0%. Those late spring wildfires in Fort McMurray put a crimp in Alberta’s crude oil production, with falling durable goods production and weaker exports also weighing on GDP for the month.

In company news, the tech sector got a boost last week as Google’s parent company Alphabet Inc. (NASDAQ: GOOG) reported second-quarter earnings of US$8.42 per share on revenues of US$21.5 billion, overpowering street estimates of some US$8.04 per share and revenues of US$20.76 billion. The company attributed its earnings growth to continued investment in high-growth areas such as mobile and video.

Check Fund Library’s Market Activity page regularly for active updates on key market indexes and commodities.

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© 2016 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

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