Earnings reports of the US companies drive the market

The US stock index S&P 500 slightly increased for the second week in a row and now, it is only 2.5% below its historic high. Investors’ attention is focused on the publication of quarterly earnings reports. From the very beginning, there were published forecasts that the aggregate profit of companies from the S&P 500 list will grow by 20% compared to the second quarter of the last year. Such high forecasts make market participants nervous and they are afraid to trade. On Friday, the volume of trades on the US stock markets was the lowest in the current year. Over the past 30 days, the S&P 500 has increased less than 1% and investors’ attention is still focused on the most reliable sectors of the US stock market. The sector of utilities and real estate companies added 7.7% over the same period and 3% respectively, significantly outperforming the market.

According to the results of the last week, the US dollar index increased as well. This was contributed by a slight increase in inflation in June, which increases the likelihood of the further Fed rate hike. However, the next meeting of the US regulator will not be soon - August 1. The main factors affecting the dynamics of financial markets in the current week may be the China-US trade war and the quarterly earnings reports of the US and European companies. This week, the largest companies and banks will release their reports. Among them are Bank of America, Netflix, Goldman Sachs, Johnson & Johnson, Morgan Stanley, eBay and many others. No significant economic data is expected in the US, however secondary indicators will be published. The speech of Fed Chairman Jerome Powell in the Senate with a semi-annual report on Tuesday and Wednesday may affect the US dollar dynamics.