The first trading day of August is opening with renewed excitement as U.S. stock index futures begin the month
ahead by 0.6%. The major averages already managed to log their sixth month of gains in July, though volatility increased over worries about the rapidly spreading Delta variant. Progress on a massive U.S. infrastructure proposal also boosted sentiment, while concerns eased over China's recent regulatory crackdown.
Some caution: "Shares remain at risk of a short-term correction or volatility as coronavirus cases rise globally, the inflation scare continues and as we come into seasonally weaker months, but surging company profits in the U.S. and lower bond yields are providing support," said Shane Oliver, head of investment strategy and chief economist at AMP Capital.
Over the weekend, Dr. Anthony Fauci said the
U.S. will not lock down again to curb COVID-19 but "things are going to get worse" as Delta fuels a surge in cases. "I think we have enough of the percentage of [vaccinated] people in the country - not enough to crush the outbreak - but I believe enough to not allow us to get into the situation we were in last winter." New coronavirus infections have increased five-fold from just a month ago, with states like Florida recording its highest case numbers for the entire pandemic.
On the economic calendar: The core personal consumption expenditure index, an inflation gauge that Federal Reserve officials keep a close eye on, increased
3.5% Y/Y in June, its fastest rate since 1991. But don't expect the central bank to take any action soon, with Fed Chair Jerome Powell saying he isn't going to change course on one month's data. Meanwhile, earnings season continues this week with results from Alibaba (
BABA), General Motors (
GM), Kraft Heinz (
KHC) and Roku (
ROKU). Of the 59% of S&P 500 companies that have reported for the second quarter, 88% have beaten consensus earnings expectations, according to FactSet. (
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