*Investors run the risk of reading too much into Powell’s somewhat toned down hawkish rhetoric last week and have brushed off hawkish remarks by the Fed’s most dovish policy maker, Neel Kashkari, on Sunday, likely because he is not a voting FOMC member this year.*
The Fed does not want to trigger a recession, but their first and much stronger priority is to get inflation under control. If that means driving risk assets lower, that is what they will do
*While more than half of the S&P 500 companies that reported earnings so far have exceeded analyst estimates, the rate of earnings beats still trails the 62% average pace set in the last five quarters. And companies are worried about the economy, with executives and analysts on track to use phrases related to an economic slowdown three times more on second-quarter calls than they did during first-quarter results.*
More than 170 S&P 500 companies reported results last week, while more than 150 are slated to report this week. Just two components of the Dow were slated to report, with Caterpillar Inc. CAT due on Tuesday and Amgen Inc. AMGN set for Thursday.
Shares of *Boeing Co.* finished 6.1% higher to lead Dow gainers after the aerospace and defense giant reportedly cleared a hurdle with the Federal Aviation Administration that could allow it to resume deliveries of its 787 airliner. The FAA said it would approve Boeing’s process for validating fixes to each 787 plane before they are delivered to customers, according to an Associated Press report.
Separately, The Wall Street Journal reported that Boeing’s defense manufacturing plants will vote on Wednesday on a labor contract proposal, which temporarily delays a strike that was scheduled to begin as soon as Monday.
After a very robust July, we’re kicking off a new month with trading sentiment that’s cautiously optimistic. *We’re entering a new week in which we’re going to see a parade of Fed speakers and investors will likely over-interpret the messages that we’re getting from them.*
*In other data, spending on construction projects fell 1.1% in June, the Commerce Department reported Monday. Economists polled by The Wall Street Journal had expected a 0.4% increase.*
*Overseas, Chinese manufacturing activity unexpectedly contracted in July, as Beijing’s COVID-19 restrictions and weak demand undercut hopes for a more robust economic revival. The official manufacturing purchasing managers index pulled back to 49.0 in July from 50.2 in June, China’s National Bureau of Statistics said Sunday. The result left the index below the 50 level that separates expansion from contraction and short of the median forecast of 50.3 among economists polled by The Wall Street Journal.*
*Biden administration faces midnight court deadline to defend $350 billion of Trump’s China tariffs, even as the White House considers scaling them back to lower consumer prices and ease inflation.*
The National Security Council’s spokesman recently called the tariffs “poorly designed,” “a shoddy deal” that “increased costs for American families.
*Companies in focus*
• U.S.-listed shares of *Nio Inc.* finished up by 2.3% after the China-based electric vehicle maker reported deliveries rose in July from a year ago to mark a third-straight monthly increase.
• *Alibaba Group Holding Ltd.* acknowledged in a Monday filing that it has been identified by the Securities and Exchange Commission as a foreign company whose auditing paperwork couldn’t be fully inspected by the Public Company Accounting Oversight Board, though the company said it would work to stay listed on the New York Stock Exchange. Shares of Alibaba’s American depositary receipts closed up by 1.1% after a roughly 11% decline on Friday.
• Shares of *Perkin Elmer Inc.* finished 5% higher after the disease diagnosis company announced an agreement to sell its Applied, Food and Enterprise Services businesses for $2.45 billion in cash to private-equity firm New Mountain Capital.
By: via @AlliesFin Serve Stock Market
