Despite poor American economic indicators related to consumption and the labor market, the major indices on Wall Street continued to post gains for the fifth consecutive week last week, as strong corporate earnings boost investor sentiment.
The Dow Jones index strengthened by 1.8 percent last week, reaching 10,653 points, while the technology Nasdaq index rose by 1.5 percent to 2,288 points. The S&P 500 increased by 1.8 percent to 1,121 points. Since July 2, the S&P 500 index has jumped by 9.7 percent, thanks solely to strong quarterly earnings from companies.
While the beginning of the week on global exchanges started optimistically, thanks to procurement management indices in the industrial sectors of the U.S. and Eurozone exceeding analysts’ expectations, signals indicating a slowdown in the American economic recovery emerged during the week. Data on personal consumption and income indicated that Americans remain very cautious about spending their money. Following a slight increase in June, personal consumption and income for Americans stagnated in July.
Orders to the American industry also fell in June by 1.2 percent, approximately double what economists had expected. The number of existing homes sold also decreased. Even more disappointing were the latest labor market data. At the end of the week, it was reported that 131,000 Americans were unemployed in July, which is double what analysts had estimated. The unexpected drop in employment suggests that employers are still hesitant to hire, which could dampen economic growth in the coming months.
However, the impact of disappointing indicators on investor sentiment was overshadowed by second-quarter corporate earnings, which exceeded expectations on both sides of the Atlantic. So far, 443 companies listed in the S&P 500 index have reported results on Wall Street, with 75 percent reporting higher profits than estimated in a Thomson Reuters survey, while only 9 percent fell short.
