July 31, 2020

In a data-filled day of trading, the U.S. equity markets were mixed yesterday.  The Dow and S&P 500 finished the day 225.92 and 12.22 points lower, respectively, while the tech-heavy NASDAQ bucked the trend by gaining 44.87 points.  While there were several reports released yesterday indicating the strength of the U.S. economy as well as the U.S. consumer, all eyes were on the release of the 2Q GDP (gross domestic product) figure and the quarterly earnings reports from the four big tech names.

Data from the U.S. government released yesterday showed the U.S. GDP plunged by a record 32.9% in the 2nd quarter of 2020, actually beating the decline of 34.7% which was estimated by economists surveyed by Dow Jones.  While the GDP decline was the worst in U.S. history, it was well-expected and didn’t make much of an impact on the day’s trading.  It did, however, confirm the belief that the U.S. economy is in a technical recession, defined as two consecutive calendar quarters with negative GDP.

Of the four big tech names reporting earnings yesterday, Amazon got the spotlight by reporting a 40% increase in sales in the 2nd quarter.  While earnings expectations were high, Amazon showed the power of the U.S. consumer with a huge surge in on-line shopping.  

Stocks in the Eurozone also picked up yesterday, with gains highlighted in Germany and Italy.  Developed foreign large cap stocks have been breaking out for the last few months, giving U.S. investors a solid risk-adjusted choice for buying stocks they may have not purchased in the past few years.

Markets are mixed again today, with the Dow and S&P 500 running in the red while the NASDAQ continues to produce (slightly) positive performance in an uneasy market.