Despite Friday’s strong rally, the major stock benchmarks pulled back this week as earnings season kicked off, with the banks reporting mixed results and a key inflation reading coming in hotter than expected. The Dow Jones Industrial Average and S & P 500 on Friday broke five-session losing streaks and the Nasdaq closed up for a second straight day. The market caught some support at the end of the week despite the suboptimal quarterly updates as investors weighed the possibility that June’s consumer price index was possibly the last big print given the rapid decline we have seen in commodity prices, especially energy prices, which was not fully reflected in the June report and a dynamic we spoke to earlier this week. While bank earnings did come up short, the management commentary generally served to support the notion that any potential economic recession would likely not be that deep in nature, perhaps speaking to Friday’s positive market reaction. Consumer Staples managed to eke out a marginal gain this week, while all the other 10 sectors in the S & P 500 closed in the red led by Communication Services and followed by Energy and Materials. The U.S. dollar index finished the week at around the 108 level. The dollar has been strong lately, touching parity with the euro this past week. We’ve recently written about the risks to multinational companies in our portfolio due to currency fluctuations heading into the thick of earnings season. Elsewhere, gold was roughly $1,700 per ounce. West Texas Intermediate crude remained at under $100 per barrel. The yield on the 10-year Treasury held at around the 2.93% level. Looking Back We got earnings mixed results from Club holdings Morgan Stanley (MS) and Wells Fargo (WFC). We think Morgan Stanley’s 4% dividend yield and recently announced $20 billion stock buyback plan compensate us enough to be patient after second-quarter missteps, including a $200 million regulatory fine. Wells Fargo, on the other hand, reported a much better than feared second quarter. On the economic front: On Wednesday, we got a hotter than expected consumer price index (CPI) report for the month of June, which pointed to a 9.1% annual increase, above expectations for an 8.8% advance. Core CPI was also hotter than expected, rising 5.9% annually versus 5.7% expected. We looked closely at that headline June CPI increase, which was the biggest year-over-year jump in 41 years, to see how investors should be thinking about this persistently high inflation as it relates to their portfolios . On Thursday, we got the June producer price index (PPI) report , which indicated an 11.3% annual increase, exceeding the 10.7% estimate. Core PPI came in at 6.4% annually, versus 6.8% expected. Also Thursday, initial claims for the week ended July 9 came in at 244,000, above expectations of 235,000. On Friday, June retail sales were reported to have advanced 1% monthly, ahead of the 0.9% expected. Also on Friday, June industrial production was reported to have decreased 0.2% monthly while capacity utilization was reported to have contracted to 80% from 80.3%. What’s ahead Within the portfolio, we’ll get earnings from Johnson & Johnson (JNJ) and Halliburton (HAL) before the opening bell Tuesday. Danaher (DHR) reports before the bell Thursday. Here are some other key earnings reports and economic numbers to watch in the week ahead. Monday, July 18 Before the bell: Bank of America (BAC), Goldman Sachs (GS), Charles Schwab (SCHW) After the bell: IBM (IBM) Tuesday, July 19 Before the bell: Lockheed Martin (LMT), Novartis (NVS), Hasbro (HAS) After the bell: Netflix (NFLX), JB Hunt (JBHT) 8:30 a.m. ET: Housing starts and building Permits (June) Wednesday, July 20 Before the bell: Abbott Labs (ABT), Baker Hughes (BKR), Biogen (BIIB), M & T Bank (MTB), Northern Trust (NTRS) After the bell: Tesla (TSLA), United Airlines (UAL), CSX (CSX), Alcoa (AA), Las Vegas Sands (LVS) 10 a.m. ET: Existing home sales (June) Thursday, July 21 Before the bell: AT & T (T), Dow (DOW), American Airlines (AAL), Nucor (NUE), DR Horton (DHI), Travelers (TRV), SAP (SAP), AutoNation (AN), Philip Morris (PM), Freeport McMoRan (FCX), Union Pacific (UNP), Nokia (NOK), Domino’s (DPZ) After the bell: Snap (SNAP), Mattel (MAT), Boston Beer (SAM) 8:30 a.m. EST: Initial Jobless claims (week ended July 16) Friday, July 22 Before the bell: Twitter (TWTR), Verizon (VZ), HCA (HCA), American Express (AXP), Schlumberger (SLB), Cleveland-Cliffs (CLF) (Jim Cramer’s Charitable Trust is long MS, WFC, JNJ, HAL, DHR, PXD, LLY, HUM and QCOM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
