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News & Views

Provided by the Investment Professionals of Frost Investment Advisors | August 02 , 2021

Despite Market Ups and Downs, Earnings Growth and Economic Recovery Show Strength 

Although the major U.S. stock indices ended last week on a down note, the S&P 500 posted a sixth straight month of gains – its longest streak since 2018. Even with Amazon dropping 7.6 percent because of “disappointing” sales growth of 27 percent, the S&P 500 is still within 0.06 percent of its record high posted on Monday, July 26. It was a busy week for earnings, with roughly three-fifths of companies in the S&P 500 reporting results for the second quarter. So far, profits have exceeded the already high expectations set by Wall Street.

This, of course, means companies are doing well and the economic recovery continues apace. According to FactSet, 88 percent of companies have reported higher sales numbers for the last quarter than analysts had expected. That’s a significantly greater percentage than usual. 

Strong earnings reports have helped support the stock market, even as other worries have made trading unsteady. Concerns are rising about whether the new delta variant of the coronavirus may impact the economy, while a crackdown by Beijing on Chinese tech companies has unsettled investors around the world. High inflation levels also remain a concern, but the Federal Reserve seems to be focused on the phenomenon and will act if and when necessary to curb rising prices.

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