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  • Writer's pictureRaymond Kanyo, CFA

MarketBites: Earnings Have Surprised In A Good Way


Portfolio Manager Commentary:

Stocks traded lower to kick off August. The pullback is understandable after July's performance, which was the best since 2020.

Treasury yields dipped as investors become more comfortable with the expectation of lower rates and quantitative easing should we enter an official recession. Investors should be cautious, however, because the Federal Reserve's job is not to prop up the stock market, but to bring inflation down to 2% while maintaining full employment. More often than not, they break the stock market in their attempt.

Energy stocks were the worst performers on Monday after oil prices dropped over 4%. The drop in oil prices came after poor Chinese economic data added to concerns that a global slowdown may reduce demand.

So far the Q2 earnings season has been not as bad as expected as over 50% of companies have beat analyst estimates. This week BP, Caterpillar, PayPal, Moderna, and ConocoPhillips are some of the more notable companies reporting.

Political tensions between the U.S. and China intensified as House Speaker Nancy Pelosi is expected to visit Taiwan today, despite considerable opposition and threats from China. Pelosi's visit would make her the highest-ranking US official to set foot on the island in 25 years. The faith of Taiwan is significant as the island is one of the largest manufacturers of global semiconductors. A potential military conflict could cause major disruptions across numerous industries.

Chart of the Day:

As we move through August and September, investors may hear about the late summer swoons of years past. Here's how the market has performed, historically, during the two months.

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