U.S. equities and stock exchange traded funds strengthened in July and experienced one of their best months since February as a strong corporate earnings season helped maintain the momentum in the ongoing bull market.
U.S. stocks rose over July, with the Dow Jones Industrial Average up 1.9%, the Nasdaq Composite 2.8% higher and the S&P 500 up 1.6%.
Over the past month, the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO) rose 1.4% while the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained 1.9% and PowerShares QQQ (NasdaqGM: QQQ) increased 2.7%.
The best performing non-leveraged exchange traded products for the past month include the VanEck Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX) up 22.1%, Global X Copper Miners ETF (NYSEArca: COPX) up 19.5% and Global X Brazil Consumer ETF (NYSEArca: BRAQ) up 14.9%.
On the other hand, the worst non-leveraged ETPs of the past month include the iPath Pure Beta Softs ETN (NYSEArca: GRWN) down 12.3%, VellocityShares 1x Long VSTOXX Futures ETN (NYSEArca: EVIX) down 11.4% and REX VolMAXX Long VIX Weekly Futures Strategy ETF (BATS: VMAX) down 10.2%.
The month of July started off on a weak footing as lackluster economic data weighed on sentiment. The Federal Reserve official were also not sure of themselves, at least from the early FOMC meeting, over whether or the economy is strong enough to start a wind down of its debt hoard from the QE program.
Nevertheless, second quarter corporate earnings helped push U.S. markets out of their malaise, with a greater-than-expected number of companies beating expectations.
Meanwhile, Federal Reserve Chair Janet Yellen revealed confidence in the economy and the outlook, projecting a potential tapering of its $4.5 trillion bond stash to begin sometime this year and wind down in 2022. The Fed, though, will still maintain its low interest rate in face of a stubbornly depressed inflation level that remains below its 2% target.
The markets were also slightly subdued due to political uncertainty after the Trump administration’s failure to push through health care reform or a replacement for the Affordable Care Act. Many observers saw the failure as a sign of trouble for the administration’s ability to enact its pro-growth economic agenda, including tax cuts and increased fiscal spending.
The market rally slightly leveled out in the final weeks of July as traders engaged in the time-honored tradition of profit taking after a record run-up in U.S. markets.
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