This stock market today was like watching Belgium play Japan in the World Cup. One minute its down and then at the end of the game it is up. The Dow today opened to the negative with triple digits but then over the course of the day it worked its way positive before ending with a closing gain of 35 points at 24,307. Trading volume was lower than last Friday maybe due to the upcoming 4th of July Holiday. Todays action is indicative of the uncertainty surrounding current trade negotiations and how they might play out.
Corporate earnings for Q2 will be reported starting next week and the numbers are expected to show continued strength. Factset has reported that gurus are estimating earnings growth at the best level since Q3 2010 with consensus showing S&P 500 earnings gaining 20%. The energy sector is getting the most upward revisions. Should earnings actually come in at a 20% growth rate the forward PE ratio for the index will stand at a reasonable 16.1.
In recent economic news the ISM manufacturing index climbed back over a reading 60 and so far this year has averaged a respectable reading of 59.2 which is the best since 2004. Growth in June was broad based with 17 of 18 sectors reporting expansion and none reporting contraction. New orders and production readings stand at about 60 which is an indication that strength in US manufacturing should remain in place going forward. Meanwhile, personal income rose 0.4% and is now up 4% over the past year marching the largest increase in 3 years. Personal spending is up 4.6% over the past year.
This week will be a light one as markets close early on Tuesday and all day Wednesday while people gather, sing songs and blow things up. Regular hours of operation will occur Thursday and Friday but these two sessions will most likely be a write off as traders in the Hamptons will not be interested in making the trip back to the big city.