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Breaking a seven-session losing streak, the market started the week on a positive note, with Warren Buffett’s Precision Castparts deal boosting investor sentiment. Institutional candour and Chinese economic commentary continued to weigh on certain stocks, with 734 NYSE issues recording losses throughout the Monday session. Interestingly a report from Thomson Reuters highlighted a 23% year-on-year rise in corporate cross border deal activity in July. This is one of the largest increases since the ’80s.
The Berkshire Hathaway deal overshadowed disappointing Chinese data on Monday, with the Dow Jones finishing the session 1.4% higher.
On the economic front, Atlanta Fed President Lockhart noted that interest rates would be rising in the short term. This fell in line with the September expectation. Labor Market Conditions softened slightly month on month.
China’s strategy to devalue the yuan pushed Wall Street lower in trade on Tuesday, with the S&P 500 finishing at 2,092.44 (down 0.56%). Central bank officials confirmed that the devaluation was a “one off” scenario. Such a view was not shared by investors, with the offshore yuan retreating 2.9%. This was the biggest fall since 1994.
Volatile session on Wednesday, with a late rally pushing Wall Street into the black. Falling 275 points earlier, investor reaction to China’s yuan devaluation was soon balanced out by a rise in energy and technology stocks, with the Dow Jones finishing one point higher.
On the economic front, JOLTS Job Openings for June fell from the previous period.
Retail Sales slightly beat estimates in July, with a 0.6% rise recorded. This had little impact on the market, with the Dow Jones adding five points to finish at 17,408.25. Export and Import Prices in July were below consensus.
The Dow Jones reacted to better-than-expected PPI and Industrial Production figures on Friday, with the index rising 40 points in early trade. Reporting a 0.6% rise in July, the physical output metric was 0.3% above estimates. Capacity Utilization fell in line at 78%. The Producer Price Index came in at 0.2%.
Earnings season will be winding down next week. The following companies will report: Agilent Technologies (A ), Invesco Mortgage Capital (IVR ), Prospect Capital Corporation (PSEC ), Analog Devices (ADI ), China Ceramics Co. (CCCL), Dick’s Sporting Goods (DKS ), FlexSteel Industries (FLXS ), Home Depot (HD ), La-Z-Boy Incorporated (LZB ), Sypris Solutions Inc. (SYPR), TJX Companies (TJX ), Wal-Mart Stores (WMT ), American Eagle Outfitters (AEO ), Eaton Vance (EV).
Please note that this is only a selection of companies.
The following economic data will also be released: Empire Manufacturing and Housing Market Index on Monday; Housing Starts and Building Permits on Tuesday; CPI, Core CPI and the FOMC minutes on Wednesday; Initial Claims, Existing Home Sales, and Leading Indicators, on Friday.