M4 BARRON’S July22,2019
trails only tech in 2019. The broad-market
S&P 500 is up 20.8%.
Among companies reporting during the
first week of earnings season, consumer-fo-
cused businesses outpaced their more in-
dustrial or manufacturing-sensitive peers,
noted Edward Yardeni, president of
Yardeni Research.
“The U.S. consumer continues to keep
the bull market moving forward,” he wrote
to clients on Thursday. “This week saw
bank earnings bolstered by consumer lend-
ing, retail sales up strongly, and airline
earnings kept aloft by travelers willing to
spend.”
While pressure on net interest mar-
gins—given the potential for an interest-
rate cut as early as this month—and weak
trading revenues presented headwinds to
some big banks’ earnings in the second
quarter, consumer banking and lending
showed no signs of slowing.
Net income at Bank of America ’s
(BAC) consumer banking division rose 13%
from the level a year earlier. Net climbed
11% at Citigroup ’s (C) U.S.-dominated
global consumer banking group, and 22%
at JPMorgan Chase ’s (JPM) consumer and
community banking unit.
“The consumer in the United States is
doing fine,” said JPMorgan Chief Execu-
tive Jamie Dimon on the company’s earn-
ings call Tuesday. “Business sentiment is a
little bit worse, mostly probably driven by
the trade war.”
In the transportation sector, strong de-
mand for seats and tighter capacity from
the forced grounding of Boeing ’s (BA) 737
MAX airliner led to earnings gains of 54%
at United Airlines Holdings (UAL) and
43% at Delta Air Lines (DAL) in the sec-
ond quarter, compared with results in that
period last year. Railroad CSX, which re-
ported weaker-than-expected profits on
VITALSIGNS
Friday's Week's Week's
Close Change %Chg.DJIndustrials 27154.20 – 177.83 – 0.65
DJTransportation 10604.20 – 33.11 – 0.31
DJUtilities 820.08 – 4.22 – 0.51
DJ65Stocks 8950.32 – 48.77 – 0.54
DJUSMarket 740.54 – 9.02 – 1.20
NYSEComp. 13111.99 – 122.76 – 0.93
NYSEAmerComp. 2566.63 – 35.01 – 1.35
S&P500 2976.61 – 37.16 – 1.23
S&PMidCap 1937.40 – 23.09 – 1.18
S&PSmallCap 940.44 – 12.09 – 1.27
Nasdaq 8146.49 – 97.66 – 1.18
ValueLine (arith.) 6219.55 – 79.62 – 1.26
Russell2000 1547.90 – 22.10 – 1.41
DJUSTSMFloat 30565.17 – 373.99 – 1.21
LastWeekWeekEarlierNYSE Advances 1,256 1,683
Declines 1,791 1,384
Unchanged 56 41
NewHighs 468 449
NewLows 145 87
AvDailyVol(mil) 3,195.7 3,064.8
Dollar
(Finexspotindex) 97.15 96.81T-Bond
(CBTnearbyfutures) 154-240 153-230CrudeOil
(NYMlightsweetcrude) 55.63 60.21InflationKR–CRB
(FuturesPriceIndex) 178.59 184.36Gold
(CMXnearbyfutures) 1425.10 1409.90most of the attention with a 10.3% post-
earnings plunge on Thursday. A gloomy
forecast from CSX (CSX) sent its stock
and those of other railroads tumbling on
Tuesday. And Philip Morris International
(PM) soared over 8% on Thursday on its
upbeat earnings report.
The parade continues this coming week,
when 133 S&P 500 constituents are sched-
uled to report. But the lack of broader
market action might end up just being the
calm before the storm. The Federal Open
Market Committee meets a week from
Tuesday, and trade news could drop at any
time. Until then, keep your eye on your
portfolio’s individual movers.
Consumers Set the Pace
Though there were signs of manufacturing
and industrial weakness in the U.S. in the
first half of 2019, buying by consumers has
been notably strong—and that’s been good
news for businesses that serve them. With
jobs plentiful and wages on the rise, the
trend looks likely to continue.
June retail sales figures, released on
Tuesday, capped off a roaring second quar-
ter for consumer spending, which repre-
sents over two-thirds of U.S. gross domes-
tic product. Retail sales, excluding autos,
gas, and building materials, grew at an in-
flation-adjusted 6.1% annualized rate last
quarter, according to Tom Porcelli, RBC
Capital Markets’ chief U.S. economist—the
fastest pace in over a decade and a half.
The third quarter also appears to be off
to a good start. Amazon.com (AMZN)
whipped out a bevy of superlatives to de-
scribe its record-breaking Prime Day last
week. Preliminary July consumer sentiment
survey data from the University of Michigan,
released on Friday, remained optimistic.
The S&P 500’s consumer-discretionary
sector—up 24.2%, including dividends—
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