Last week, the main indices completely won back the correction of the week before last and again reached their absolute historical values. The capitalization of the S&P 500 increased by 2%, and the index itself rose to the level of 4,412 points. The Nasdaq 100 rose 3% and finally broke through the 15,000 mark, consolidating at 15,112. Investors started buying tech stocks again amid optimism about the sector's growth ahead of reports from some of the industry's biggest names. We previously noted that we expect the technology sector to outperform the broad market.
A successful start to the US corporate reporting season bolstered upbeat market sentiment following a massive sell-off on Monday sparked by fears of rising coronavirus cases. However, some investors remain worried about a possible slowdown in the global economic recovery amid the rapid spread of the Delta strain. Market participants expect volatility in the market to continue as the peak summer holiday season approaches.
The COVID-19 delta strain is expected to become the main type of coronavirus in the world in the coming months. According to the WHO, the delta strain has already been recorded in 124 territories - 13 more than last week, and in some large countries this strain already accounts for three quarters of detected cases of COVID-19. At the same time, WHO has not yet been able to describe the exact mechanism that allows the delta strain to be more infectious. The new strain remains a major risk for equity markets, primarily for companies hit hard by the pandemic last year. In the event of a global fourth wave, world central banks will maintain ultra-soft monetary policy conditions, which will support the market, in particular the technology sector.
The current week will begin with the publication of data on new home sales in the United States for June. Quite a lot of US macro data will be released on Tuesday, for example, preliminary data on durable goods orders for June, but investors will be waiting for the Conference Board's US consumer confidence index for July. The Fed will begin a two-day meeting on the change in the key rate. On Wednesday, representatives of the FRS will provide the world investment community with their decision on the key rate. Powell's press conference is expected later in the evening, where important comments on future monetary policy can be made. On Wednesday, investors will be awaiting quarterly results for Facebook, Deutsche Bank and Barclays. On Thursday, investors will be evaluating the data on US GDP for the 2nd quarter. The indicator is expected to show growth of 8.3% qoq. On Friday, packs of important macroeconomic data from the US and the Eurozone will be published.