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Jul 26 2018

7/26/18 Market Notes

There was little action in stocks on Wednesday, until about 3:30 PM after the White House announced
that President Trump had received concessions from EU President Jean-Claude Juncker. The S&P
jumped nearly 1% on the news, as a mixed market turned decisively positive with 10 of the 11 sectors
of the S&P ending higher. Telecom shares where in negative territory, holding back the Dow Jones’
performance as Verizon (VZ) slipped 1.16% and AT&T (T) fell 4.50% for the day. After the closing
bell rang, a spokesperson for the European Union stated that neither the EU nor Mr. Juncker made
concessions or guarantees other than to agree to hold off on implementing new tariffs and considering
importing more U.S. soybeans as negotiations continue.

 
Several widely held stocks reported earnings after the bell, none more dramatically than Facebook
(FB) whose results disappointed investors, sending shares as much as 25% lower in afterhours trading.
Facebook shares are set to open about 15% or 35 points below yesterdays close. Facebook’s
disappointing earnings report is placing additional scrutiny on the other FANG stocks, after a
somewhat disappointing report by Netflix (NFLX) last week. Amazon (AMZN) is set to report Q2
earnings later today. The tech heavy NASDAQ is set to open sharply lower this Thursday morning.
On the economic front, market participants will digest the 8:30 AM release of June Durable Goods
Orders, which are expected to have risen 3.7%. The report will provide insights into economic activity
ahead of Friday’s highly anticipated release of second quarter GDP data. Many analysts believe that
Q2 GDP may have benefited from a short-term increase in economic activity as a preamble to the
newly imposed tariffs and counter-tariffs.

 
Oil prices are continuing to eke higher as tensions between Iran and the United States persist, while
the U.S. dollar is trading relatively flat against major currencies. Treasury yields are mildly higher this
morning, ahead of today’s ECB meeting and tomorrow’s GDP data release.

 

Sincerely,
The GGFS Investment Committee