Below is a summary of some of the relevant news items from the Capital Markets and the Economy from the past week extracted from RBC Global Insights and FactSet Research.

You can catch up on the past four weeks’ Weekly Update in the link to my Blog.

Read my latest Smart Investor newsletter on my website. The Q3 2024 edition covers Market Review for first half of 2024, and a list of questions for those thinking about their retirement. Shiuman’s Corner is about my favourite podcasts.

 

Markets

Market scorecard as of close on Friday July 26, 2024.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	22,815	0.6%	8.9%
U.S.	S&P 500	5,459	-0.8%	14.5%
U.S.	NASDAQ	17,358	-2.1%	15.6%
Europe/Asia	MSCI EAFE	2,325	-1.5%	4.0%

Source: FactSet

• TSX closed higher in Friday afternoon trading, near best levels. All sectors higher. TSX recorded 0.6% weekly gain.

• US equities finished broadly higher in Friday trading, though ended off best levels. S&P and Nasdaq logged weekly declines.

• U.S. stock indexes suffered significant declines during the week with the S&P 500 falling 2.3% on Wednesday July 24, its worst single-day performance since December 2022. The tech-heavy Nasdaq Composite fared even worse, down almost 9% at one point from its all-time high mark on July 10, 2024.

• Several factors contributed to the weakness, including lackluster earnings reports from mega-cap tech companies, deflating artificial intelligence (AI) sentiment, and concerns over continued weakening in the consumer sector. Overall, the market seems more focused on Q2 earnings reports and Fed policy.

 

Economy

Canada

• After a first interest rate cut in June, the Bank of Canada again lowered its key overnight rate by 25 basis points at its meeting on Wednesday, to 4.5%. The move was in line with market and our own expectations ahead of the announcement.

• After an upside surprise in May, inflation trends in Canada largely resumed lower in June with headline CPI dropping to 2.7% from 2.9%. The decline in headline inflation mostly reflected easing in energy CPI growth (to 0.5% year-over-year in June) following a 3% drop in gasoline prices month-over-month from May.

U.S.

• In the second quarter of 2024, U.S. GDP expanded at an annualized rate of 2.8%, marking an acceleration from the 1.4% growth observed in the previous quarter. Personal Consumption Expenditure (PCE) inflation data has continued to indicate easing price pressures, echoing slowing in CPI inflation in Q2.

• In the U.S., we (RBC Economics) expect no change in key interest rate from the Fed’s meeting on Wednesday. Chairman Jerome Powell had refrained from giving any guidance on future policy moves in the last few meetings and other speaking engagements. Instead, he has focused on the central bank’s assessment that employment and inflation risks are moving into a better balance—but just not to the point that would spur interest rate cuts.

Further Afield 

• China’s Third Plenary Session of the 20th Party Central Committee concluded on July 18. A resolution was published afterward detailing 300 reform tasks to be completed before or during 2029 (when the People’s Republic of China celebrates its 80th anniversary). The reforms focus on high-quality development. However, the plenum did not bring much surprise to the market, as most of the plans are for the medium to longer term.

 

Notes About Companies in Model Portfolio 

• Q2 2024 earnings season started to ramp up in earnest with 137 of the S&P 500 companies reporting results this week, and another 177 expected next week, including most of the tech heavyweights. So far, results have been generally solid, but below elevated expectations.

• CN (CNR) reported on Tuesday its financial and operating results for the second quarter ended June 30, 2024. Revenues of C$4,329 million, an increase of C$272 million, or 7%. Diluted earnings per share (EPS) of C$1.75, a decrease of 1% and adjusted diluted earnings per share of C$1.84, an increase of 5%.

• Coca-Cola (KO) reported 2024 Q2 results on Tuesday. Net revenues grew 3% to $12.4 billion, and organic revenues (non-GAAP) grew 15%. EPS declined 5% to $0.56, while comparable EPS (non-GAAP) grew 7% to $0.84.

• UnitedHealth Group (UNH) reported 2024 Q2 results on Tuesday. Revenues of $98.9 Billion Grew Nearly $6 Billion year-over-year, led by Optum. Second quarter earnings from operations were $7.9 billion, including $1.1 billion in unfavorable cyberattack effects. In June the company increased its annual dividend rate by 12%, the 15th consecutive year of double-digit increases.

• Visa (V) reported fiscal 2024 Q3 financial results on Tuesday. GAAP net income in the fiscal third quarter was $4.9 billion or $2.40 per share, an increase of 17% and 20%, respectively, over prior year’s results. Net revenue in the fiscal third quarter was $8.9 billion, an increase of 10%, driven by the year-over-year growth in payments volume, cross-border volume and processed transactions.

• Waste Connections (WCN) reported Wednesday 2024 Q2 results. Revenues were $2.248 billion, above outlook and up 11.2% year-over-year. Adjusted net income of $1.24 per share compared with $1.02 in the prior year period.

 

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I appreciate the opportunity to serve you and look forward to continuing to help you accomplish your long-term financial goals.

 

Regards,

Shiuman