A jubilant July typically heralds a sensational second half of the year. But history doesn\u2019t always repeat itself.<\/p>\n
The S&P 500 rose an impressive 3.1% last month. When the index has risen at least 2.5% in July, it averages a gain of 8.4% in the second half of the year, according to Dow Jones Market Data.<\/p>\n
But, if 2023 is going to conform to that trend, investors may well be wondering where those gains are going to come from.<\/p>\n
Now that recession fears have subsided (part of the reason for last month\u2019s gains), investors have shifted their focus when it comes to economic data. They can\u2019t be too bad as to damage the economy and bring back recession concerns, but they can\u2019t be too good as to push the Federal Reserve into more rate hikes. <\/p>\n
The sweet spot is likely to be data that are slightly below expectations. The Fed signaling an end to its hiking cycle is another potential catalyst.<\/p>\n
The history-matching gains are unlikely to come from this earnings season\u2014despite being robust, companies have not been rewarded for beating expectations. <\/p>\n
S&P 500 companies reporting positive surprises have actually suffered an average 0.2% share price decline in the period that runs from two days before earnings to two days after, according to FactSet data. That\u2019s below the five-year average of a 1% jump.<\/p>\n
The magnitude of earnings surprises is also below historical averages, and expectations are low\u2014which may explain the muted reaction. <\/p>\n
If any company can buck that trend, it\u2019s likely to be Apple\u2014which reports results Thursday. But the tech giant\u2019s 51% gains so far in 2023 mean it needs to produce something special.<\/p>\n
The broader stock market also needs something out of the ordinary and a bit of luck, to keep the momentum going.<\/p>\n
\u2014Callum Keown<\/em><\/p>\n *** Join Barron\u2019s associate editor for technology Eric Savitz and Ben Reitzes, managing director and head of technology research of Melius Research, today at noon when they discuss the outlook for tech earnings, AI, and tech stocks. Sign up here.<\/em><\/p>\n <\/em><\/em>Try your hand at this morning\u2019s Barron\u2019s Daily crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week\u2019s cover story, click here.<\/em><\/p>\n BP Joins Exxon and Chevron in Oil Profit Slump<\/h2>\n BP joined its peers Shell, Exxon, and Chevron in reporting a sharp profit drop in the second quarter due to lower oil and gas prices. This comes amid global oil prices rallying on optimism that recession fears have been overdone.<\/p>\n What\u2019s Next:<\/strong> The strong run in global oil prices looks set to continue. The front-month nymex crude (WTI) is up 15.22% this month, according to Dow Jones market data. Statistically when oil rises at least 10% in the month of July there are average gains of 39.89% for oil over the second half of the year.<\/p>\n <\/em>\u2014Callum Keown and Rupert Steiner<\/em><\/em><\/p>\n \n SoFi Technologies What\u2019s Next:<\/strong> Resuming federal student loan repayments in October will subtract about $9 billion a month from consumer spending, or $100 billion a year, said Apollo Global Management chief economist Torsten Sl\u00f8k.<\/p>\n \u2014Janet H. Cho and Emily Dattilo<\/em><\/em><\/p>\n Travel Stocks Gain Attention as Americans Take Time Off<\/h2>\n As Americans maintain their summer travel comeback after the Covid-19 pandemic, website traffic to major hotel websites ticked up more than 5% in May and early June, analytics firm SimilarWeb said. That\u2019s a bullish sign for hotel stocks, according to Raymond James analyst William Crow.<\/p>\n What\u2019s Next:<\/strong> Unesco wants to add Venice to its list of World Heritage sites in danger from \u201cirreversible\u201d damage from climate change, mass tourism, and insufficient efforts by Italian officials to address ongoing issues. The recommendation could be adopted by UNESCO\u2019s World Heritage Committee in Riyadh in September.<\/p>\n <\/em>\u2014Teresa Rivas and Janet H. Cho<\/em><\/em><\/em><\/p>\n \n Arista Networks What\u2019s Next:<\/strong> For the September quarter, Arista expects revenue of $1.45 billion to $1.5 billion, beating Wall Street expectations. Arista projects third-quarter adjusted gross margin of 62%, and adjusted operating margin of 41%.<\/p>\n \u2014Eric J. Savitz and Janet H. Cho<\/em><\/em><\/p>\n There\u2019s yet another $1 billion multistate lottery jackpot up for grabs. The Mega Millions grand prize\u2014actually estimated around $1.05 billion\u2014is the fourth-largest in that lottery\u2019s history. The drawing is at 11 p.m. Eastern time tonight.<\/p>\n What\u2019s Next:<\/strong> If a winning ticket is drawn tonight, there\u2019s an option to take the 30-year annuity payout with an initial payment of roughly $15 million, or a lump sum, estimated at around $528 million.<\/p>\n \u2014Liz Moyer<\/em><\/em><\/em><\/em><\/em><\/p>\n***<\/h4>\n
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SoFi Technologies Gets a Jolt from Personal Loans, Deposits<\/h2>\n
\n shares soared to a new 52-week high after beating second-quarter expectations, as a bump in home-loan and personal loan volumes helped overcome uncertainty about the future of federal student loan repayments. Shares jumped more than 20%.<\/p>\n\n
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\n Hilton Worldwide Holdings,<\/span>
\n which has a pipeline of new growth, and
\n Ryman Hospitality Properties,<\/span>
\n the locations of which in high-demand places<\/strong> such as Orlando and Denver are recording increased supply but few direct rivals in group travel.<\/p>\n<\/li>\n
\n Expedia
\n Group, and
\n Booking Holdings,<\/span>
\n rating both travel booking stocks a buy-equivalent. He believes Expedia will benefit from \u201cbetter hotel trends, operational improvements, and attractive valuation,\u201d and Booking will \u201cgenerate stable growth<\/strong> and margin expansion.\u201d<\/p>\n<\/li>\n
\n Airbnb
\n stock for its higher valuation, and
\n Tripadvisor
\n because of increased competition for its Viator travel booking brand and the threat of artificial intelligence<\/strong> in trip planning.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n
Arista Networks Beats Expectations and Signals Growth<\/h2>\n
\n shares traded sharply higher after the data-center-networking hardware provider posted second-quarter results that were better than analysts had feared. Shares rose 14% in late trading Monday.<\/p>\n\n
\n Juniper Networks,<\/span>
\n and signs of moderating spending from Arista\u2019s two biggest customers,
\n Microsoft
\n and Facebook\u2019s
\n Meta Platforms.<\/span><\/p>\n<\/li>\n
\n ZoomInfo
\n cut its September quarter guidance after second-quarter revenue rose 16%<\/strong> but came in slightly below expectations. It now sees September-quarter revenue of $309 million to $312 million, which is lower than Wall Street estimates.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n
There\u2019s Another $1 Billion Lottery Jackpot Up for Grabs<\/h2>\n
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