As geopolitical fears subside and investors’ focus returns to earnings and the economy, the leading sector this week is technology with the Dow Jones U.S. Technology index gaining 1.78 percent over the past five trading days.
Recent gains in this sector are a result of investors reacting to the latest earnings reports, which have pushed stock prices of several leading technology companies higher. It’s now becoming clearer why investors have had a bias toward technology over the past several weeks and why this sector has held up so well through recent market pullbacks.
The second-leading sector for the week is energy. Although in a larger picture the energy sector appears to be in a trading range, the recent spike in the price of energy-producing companies appears to have coincided with the downing of Malaysian Flight 17, as geopolitical tensions were escalating. This same reaction also holds true for gold mining companies, which are part of this week’s leading industry. For the week, the Dow Jones U.S. Energy index rose 1.33 percent while the Dow Jones U.S. Gold Mining index is higher by 3.2 percent over the same period. For comparison purposes, over the past five trading days, the Standard & Poor’s 500 is up 0.51 percent.
Tuesday’s release of the Consumer Price Index for June indicated that inflation pressures held steady with a 0.3-percent gain. This was slightly below the 0.4 percent gain from the prior month, with the year-over-year inflation rate holding just above the key 2 percent level at 2.1 percent. As would be expected during the summer driving months, gasoline jumped 3.3 percent in June, although food prices gained only 0.1 percent as fruits, dairy and cereals declined.
In other economic news, existing home sales rose sharply in the second quarter, with sales of existing homes gaining 2.6 percent in June to a higher than expected annual rate of 5.04 million. The higher-than-expected gain in June comes on the heels of a 5.4 percent gain in May and a 1.5-percent increase in April.
Fortunately, gains did not come on the back of lower home prices, with the price of the median home up 5.3 percent to $223,300.
This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate. This article was written by Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH).