For the week ended July 18 2014, S&P 500 and Dow Jones Industrial Average rose by 0.5% (10.65 points) and 0.9% (156.37 points), respectively, during the week. S&P 500 closed the week at the level of 1,978.22, while DJIA closed at 17,100.18. The Standard & Poor’s 500 Index has increased by 7.03% this year with the effects of better-than-estimated corporate earnings and central bank stimulus as the U.S. economy shows signs of recovering from a 2.9% contraction in the first quarter.
The week’s developments were:
1) Better-than-expected earnings at several companies (especially thanks to leading banks) offset geopolitical concerns.
2) News that a Malaysian Airlines jet had apparently been shot down over Ukraine and Israeli ground invasion of the Gaza has caused to increase selling pressures in the markets.
3) Annual economic growth in China rose 7.5% in the second quarter. This modestly exceeded expectations and reinforced hopes that targeted government stimulus measures are making a difference.
4) Comments from Janet Yellen and Beige Book report support the moderate expansion US economy.
5) US housing starts fell 9.3% and building permits dropped 4.2%, however, homebuilders have growing optimism for the industry.
6) Initial claims for unemployment benefits fell 3,000 to a seasonally adjusted 302,000 in the week ended 12 July. The moving four-week average also fell 3,000 to 309,000. That shows the US labor market is strengthening.