The domestic markets rose higher yet again last week, setting new records. The tech centric Nasdaq made the largest gains, closing out the week 2.26% higher. The S&P 500 followed behind, while the Dow Jones Industrial Average barely stayed in the green.
The lack of performance in the Dow was the result of a lack of diversification and a poor earnings result in Boeing specifically.
Conversely, the S&P 500 sectors closed mostly higher with only Energy and Utilities seeing losses for the week. The top performer was the Communication Services sector as a number of stocks that also trade on the Nasdaq took this sector over 4.5% higher last week.
This was despite the headline news that the Department of Justice was preparing an Antitrust Investigation into some of the biggest tech names in the world. The government performs these types of investigations when it is suspected that a business is performing actions that dominate market share and reduce competition. For the last 50 years, companies have largely avoided government scrutiny if they have focused on the consumer welfare, such as a by lowering prices. However, the fact that many of the companies being targeted offer a significant portion of their services to the general public for free, presents an interesting new wrinkle to this guideline.
https://www.nytimes.com/2019/07/23/technology/justice-department-tech-antitrust.html
In other government news, Congressional leaders announced a bipartisan deal to increase the debt ceiling and suspend the borrowing limit until Jul 31, 2021. The Treasury department anticipates that the government spending will exceed $1 trillion for the second consecutive year, but down from 2018.
https://www.wsj.com/articles/treasury-to-borrow-over-1-trillion-in-2019-for-second-year-in-a-row-11564428624
Overseas, the Brexit saga began a new chapter as Boris Johnson won the race to become the next Prime Minister, replacing Teresa May. For many, Johnson represents the human face of the Brexit movement. Already, he has come out stating that Brexit will happen, saying:
“I say to all the doubters... we are going to energize the country, we are going to get Brexit done on Oct. 31, we are going to take advantage of all the opportunities that it will bring in a new spirit of can do,”
In economic News, Friday’s release of GDP exceeded estimates of an annualized rate of 1.9% with a reading of 2.1%. This served as the climax to the economic reports for the week that came in largely positive.
Nevertheless, this hasn’t shaken the markets anticipation for a rate decrease later this week following Tuesday and Wednesday’s FOMC Meeting.
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