The Monthly Monitor

July Market Insights

By Kevin Lewis and Henry He | 5 - 10 minutes

Stocks produced strong gains in July, helping the S&P 500® Index end the month in positive territory year to date. That’s a remarkable turnaround given the February-March bear market. Massive monetary stimulus from the Federal Reserve continues to fund the rally. In terms of economic data, measures of economic and corporate earnings growth were historically bad, but not as poor as feared. For example, U.S. economic growth in the second quarter was the worst ever recorded but better than the direst forecasts. Similarly, corporate earnings declined sharply, marking the biggest year-over-year decline since the fourth quarter of 2008. Nevertheless, the reported 36% fall in reported S&P earnings is well ahead of the expected 43% decline. Health care stocks led the broader market before finishing just behind the S&P 500.

In the Health Care sector, every industry segment produced strong gains except Biotechnology, which gave back recent gains in July. Health Care Technology and Life Sciences Tools and Services companies were the best performers. Health Care Technology stocks continued to benefit from demand for remote care. Similarly, strong demand for research and testing equipment supported Life Sciences Tools companies. Pharmaceutical stocks, the largest portion of the Health Care sector on average during the period, produced positive returns but lagged the broader market. Leading companies’ progress toward a COVID-19 vaccine supported these stocks. 

The Monthly Monitor

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The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

References to specific securities are for illustrative purposes only, and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.