July 2021 in Review

Daniel Zeigler, CFP, CMFC, Portfolio Manager

Hi everyone, this is Dan Zeigler, Portfolio Manager at Midland Wealth Management. Today I just wanted to provide everyone with a quick recap on the markets for the month of July.

The equity market was mixed in the month as markets experienced slightly more volatility, as investors focused on the Delta variant, Chinese regulation, corporate earnings, higher inflation and disappointing GDP growth in the 2nd quarter.

Corporate earnings have been great with the index currently reporting the highest year-over-year growth in earnings since the 4th quarter of 2009 and companies are reporting earnings that are 17.2% above analyst estimates. However, it seems investors continue to expect even better earnings in the future. For example, several large technology companies declined after they reported record earnings, mainly because their next quarter outlook was slightly behind Wall Street’s expectations.

Also, we got the 2nd quarter U.S. GDP growth was released last week, which showed the U.S. grew by about 6.5%, which was disappointing and below expectations of about 8.4%, but was still above the 1st quarter growth of 6.3%. Declines in private inventory and residential investment held back gains for the quarter.

The Fed continues their easy monetary policy and last week noted that the economy has come a long way since the COVID-19 recession, however it still has a ways to go before the central bank considers adjusting its easy money policies. The Fed continues to forecast low rates for the next several years and they are continuing to purchase over $100 billion in bonds every month.

The S&P 500 was up 2.44% for the month of July, which actually marks its 6th straight month of positive returns and is up 18% for the year. The small-cap index was one of the worst performers, which was down a little over 3.5% for the month. Also down was emerging markets as they experienced larger volatility and were down 5.5% for the month, mainly due to China’s comments on regulation and their guidelines on ending for-profit education companies.

Also, Congress appears to have agreed on a skinny infrastructure bill which should have a strong chance of approval.

As we continue into the summer months, we’ll be keeping a close eye on the Delta variant. According to some analysis, about 75% of the U.S. population has some immunity of COVID-19 because they have been vaccinated or have already had the disease.

Thanks for joining me today for a brief update for the month of July. If you didn’t get a chance to listen to our mid-year outlook last month, check out our latest webinar on the website.