It has been quite a busy week, with the CDC revising mask guidelines and international travel being restricted, the markets are keeping it interesting, and the games have begun for the 2020* Olympics.
The Tokyo Games for the 2020 Olympics began last Friday with the world’s best athletes competing for a spot on the podium. These much-anticipated games have not been without its challenges. Despite all the precautions, several athletes tested positive for Covid-19 and were unable to showcase their talents or represent their country. Gymnast Simone Biles, two-time Olympian and six-time Olympic medalist, has withdrawn from competing in Thursday’s individual all-around gymnastics competition. Viewership is down compared to the Rio Olympics in 2016. Surfing and skateboarding made their inaugural debut which included 7 Californians. So far, the United States has won 14 gold medals, 14 silver medals, and 10 bronze medals, bringing the grand total to 38.
The U.S. decided to keep all travel restrictions in place due to concerns of rising Covid-19 cases brought on by the highly transmissible Delta variant. The Delta strain is now present in 111 countries, and governments are grappling to contain it without enforcing restrictions and mask mandates. On Tuesday, the CDC issued a revised mask guidance recommending that vaccinated and non-vaccinated persons should wear masks indoors when in areas with “substantial” and “high” transmission of Covid-19. According to the CDC, just 49% of Americans are vaccinated and in the last year Covid-19 has been able to mutate and more effectively evade our immune systems. Today, President Biden announced that Federal employees must be vaccinated or get tested regularly. Many U.S. companies are beginning to follow suit.
It’s been a relatively busy week of headline news with a mix of earnings releases, statements from Fed Chair Powell, and major economic indicators. Despite the busy week, actual movement in the equity indexes were rather mute. As of last Friday, the S&P 500 is up 0.16%, the Dow rose 0.06%, and the Nasdaq is down -0.40%. One of the major highlights from the week comes from yesterday’s statement from Chairman Powell indicating that the scaling back of asset purchases is getting very close, with expectations for later this year. However, it is important to note that the Fed has restated that they are nowhere near considering plans to raise interest rates. The overall economy continues to improve with GDP for Q2 growing 6.5% but came under expectations of 8.5%. On the earnings front, a majority of companies are surpassing estimates, but many aren’t getting favored by investors. Forward earnings estimates seem to be the culprit. Facebook surpassed its Q2 earnings estimates but fell on expectations for ad-revenue headwinds in the next quarter. Same with Amazon, which is down 6% after hours after missing revenue estimates this quarter and weak Q3 estimates. As for the rest of the week, we’ll be keeping an eye on consumer spending and the Fed’s preferred inflation gauge, personal consumption expenditures (PCE), tomorrow.
Stay tuned for the invitation to our next virtual event in the coming weeks.