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Markets in a Minute

by Kara Murphy, CFA®
August 03, 2021

The economy grew at a torrid pace in the first half of the year. While the second half will likely see some slowing, earnings should continue to grow, partly offset by a contraction in multiples.

by Kara Murphy, CFA®

Despite the resurgence of COVID-19, the US consumer remains healthy …

  • Restaurants, hotels, gyms continue to see increased foot traffic, even in “hot” spots
  • Air traffic remains at about 80% of pre-pandemic levels 
  • Consumer spending is now above its pre-COVID trend, driven by service-oriented purchases
  • Savings rates are very healthy, providing plenty of ammunition for further spending

… and manufacturing continues to rebound despite supply chain bottlenecks

  • ISM Manufacturing index missed expectations (59.5 versus 61.0 expected), but looking under the hood the report had plenty of positive news
  • New orders component has been above 60 for 13th month in a row
  • Inventories remain low and will need to be rebuilt, suggesting more production ahead
  • Prices paid fell sequentially, though they are still quite high, indicating further price increases to come
  • Employment index rose, signaling that companies are finding workers
    • Some publicly-traded restaurants reported they have been able to staff up

Meanwhile earnings season for the S&P 500 – despite some high-profile misses – continues to gather steam …

  • 83% of companies have beat already improved expectations
  • Revenues were similarly strong
  • Highest year-over-year earnings growth since Q4 2009
  • Profit margins have reached 13%, their highest level ever

Kestra Investment Management shares Markets in a Minute every other week to help you stay on top of the latest market trends.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. Does not offer tax or legal advice.

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