Market week: Stock indexes gain in July

07-31-2020
Market week: Stock indexes gain in July

Fading consumer sentiment clouds outlook

 

Strong second-quarter earnings reports from the big U.S. technology majors helped drive the major American stock indexes to weekly gains, although dismal results in the energy sector took some of the edge off. In addition, COVID-19 cases continued to spread through most Southern U.S. states, with Florida, Texas, and Arizona recording record high death tolls during the week, followed by California.

U.S. consumer spending rose 5.6% in June, but personal income slipped 1.1%, while unemployment claims have been edging up in July, suggesting softer spending data for July. The University of Michigan’s consumer sentiment index slipped to 72.5 in July from 73.2 in June.

Technology majors Alphabet Inc., Amazon.com Inc., Apple Inc., and Facebook Inc. reported strong quarterly earnings, while Microsoft Corp. was reported to be in talks to acquire the U.S. operations of social media firm TikTok from the Chinese-government-controlled Bytedance. That helped propel the Nasdaq Composite Index to a 3.7% gain for the week, for a monthly advance of 6.8%, putting the Nasdaq ahead almost 20% year to date.

Steep earnings declines for oil majors ExxonMobil Corp. and Chevron Corp. weighed on the S&P 500 Composite Index, limiting the weekly gain to 1.7%. While the S&P 500 managed to advance 5.5% for the month, the index lags the Nasdaq year-to-date, gaining only 1.3%.

In Canada, the S&P/TSX Composite Index was held back on the week on flash estimates from Statistics Canada that gross domestic product shrank 12% in the second quarter. Moreover, the influential energy sector continued to take a beating as crude oil prices sank 2.2% on the week, with the S&P/TSX Capped Energy Index down 5% on the week and 49% year to date. Still, crude oil managed a 3% gain for the month in July. Gold, meanwhile, benefitted from its safe-haven reputation, climbing nearly 5% on the week, flirting with the record-high $2,000 level, and gaining 11% in July overall, for a 31% year-to-date advance. The S&P/TSX Equal Weight Global Gold Index has rallied 123% since its lows in March.

Fund news and updates

* Manulife fund mergers and terminations. Manulife Investment Management on July 28 announced a number of fund mergers and terminations, subject to approvals.

The following mutual funds will be terminated effective on or about Oct. 19:

And effective on or about Sept. 30, the following closed-end funds will be terminated:

* Invesco renames funds. Invesco Canada Ltd. announced on July 29 plans to change the investment objectives and names for three existing Invesco Canada funds, subject to approvals.

* CIBC debuts two new global equity ETFs. CIBC Asset Management Inc. on July 27 announced the launch of two new actively managed ETFs:

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