Welcome to August

As the attention of many traders focuses on summer vacation and hitting the beach, we should look back at a pretty remarkable market performance in July. It seems like more than a month ago that in late June disaster loomed for market bulls after shock at the Brexit vote sent the major averages tumbling. July however reversed quickly and logged a solid rally to set a new all-time high for the S&P500 index.

July Performance

The first week of each new month swings the data releases back toward the macro-economic, and August is no exception. The jobs data on the first Friday of every month is the big one of course. Barron’s reports RBC Capital Markets seeing nonfarm payrolls coming in with an increase of 175,000 and the jobless rate falling slightly to 4.8%. This report surprised most with an extreme low reading in May and again surprised with a high reading in June so watch for potential volatility around Friday’s AM report.

The ISM Manufacturing Index for July was reported after the opening bell on Monday morning, dipping 0.6 points to 52.6 showing a slower growth to U.S. factory activity. June’s reading was 53.2 which was the highest since early in 2015. Any reading over 50 signals an expansion of factory activity, but notable industrial companies like Ford (F) and General Electric (GE) recently announced earnings and forward guidance which resulted in stock declines. GE reported a 16% decline in industrial orders and Ford raised red flags about slowing U.S. sales and concerns about Europe as well.

U.S. Automakers will report July auto sales on Tuesday. Expectations are for an annual rate of 17 million to be reported. Also on the auto front Tesla (TSLA) will report earnings on Wednesday, with the company in the news this morning with details on the pending merger with sister company SolarCity (SCTY) being announced. The 0.11 shares of TSLA to be paid to SCTY shareholders actually translates to a lower price for SolarCity which caused a 5% drop in its share price.

Other notable earnings this week include:

Procter & Gamble (PG), Pfizer (PFE) and Electronic Arts (EA) on Tuesday.

Twenty-First Century Fox (FOX), Time Warner (TWX), Devon Energy (DVN), Noble Energy (NE) and Clorox (CLX) on Wednesday.

Duke Energy (DUK) and Transocean (RIG) on Thursday

EOG Resources (EOG) and Weyerhaeuser (WY) on Friday.

Also on Friday the Summer Olympic Games from Rio de Janeiro, Brazil will commence. With all the negative press about Zika virus and polluted beaches and water leading up to this event my hope is that the actual event will be safe and live up to the Olympic ideals of inspiring humanity to overcome global differences and simply compete in sport with mutual respect.

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