Recap: Week Ending August 7, 2015
Equities across the board closed in the red last week as the US Dollar caught a bid while oil sank once again. The Dow Jones Industrial Average was the worst preforming US index, falling 1.79 % last week. On the flip side, the S&P 500 was the best preforming US index, closing the week down only 1.25%. Meanwhile, the Toronto Stock Exchange Composite Index, or TSX, was unable to continue its upward push, closing down 1.15% last week. Equities were in for a rough ride last week as the Dow closed lower all five trading days. The move lower in stocks comes as major companies reported earnings, one of those being Disney. Disney reported a 4.32% surprise in earnings, with EPS coming at $1.45 vs. a consensus forecast of $1.39. Despite the upward surprise, comments regarding Disney’s view on the media space casted a bad light on the entertainment sector stating an unfriendly outlook for the near future. As a result, Disney shares tumbled over 8.5% last week. As Disney is a major part of the Dow Jones Industrial Average, the index was dragged down by the fall in Disney. Like Disney, Apple fell last week on concerns regarding growth in China. Last week Apple fell almost 4.5% to close the week at $115.52. The fall last week in Apple marks the third weekly decline in the price of what many consider to be one of the hottest tech stocks in the world. Like Disney, Apple is also a major component of the Dow Jones Industrial Average; as a result, the Dow fell hard due to Apple’s weak performance.
As mentioned previously, the commodity complex was very week last week which was led lower once again by weak NYMEX crude. The slide in prices last week marks the eight straight weekly loss for the energy product, falling $2.90 or 6.2%. Crude closed Friday at $43.87, just dollars away from its $42.41 multi-year lows which it established back in March of this year. The move lower in crude comes as demand remains weak, and supply and efficiency remain high. Like crude, gold finished the week lower, falling about a dollar. The fall in the price of gold last week marks the seventh straight weekly decline for the precious metal. Gold is fell as fears of a Fed rate hike came into the picture, putting the lid on any inflation that may be occurring in the economy.
Last week was a big one on the economic calendar with both Canada and the United States reporting their unemployment figures for the month of July. The Canadian unemployment rate held steady at 6.8%. This unchanged reading was also the consensus expectation among surveyed economists. Like the Canadian unemployment rate, the American rate remained unchanged at 5.3%. 5.3% was the consensus among surveyed economists. With this being said, US Nonfarm Payrolls came in lighter than expected at 215K vs. a previous reading of 231K and an expected reading of 223K. On a brighter note, US average hourly earnings on a year over year basis came in higher than the previous reading of 2%, coming in at 2.1%. Like the United States, Canada also saw job creation; however, it was less than expected. Last month 6.6K new jobs were created vs. a consensus reading of 9.9K and a previous reading of -6.4k. The numbers did not have a positive impact on either Canadian or American indexes, with the TSX falling 0.72% and the Dow falling 0.27% on Friday.