- The major U.S. equity indices posted strong gains in July. The Dow Jones Industrial Average rose 2.8%, the S&P 500 added 3.6% and the Nasdaq Composite increased 6.6% for the month. The U.S. being viewed as a safe haven in a chaotic world and a relief bounce from the initial Brexit shock were the main drivers for the upward move.
- U.S. crude prices declined 15.9% in the month of July to $41 a barrel, hitting a three month low. An increase in U.S. production and the oil supply is the primary cause for the drop in value. Refiners also have a glut of gasoline which has driven down the price at the pump. This is bad for energy companies’ earnings, but a windfall for consumers.
- Fueled by low interest rates, M&A activity remains strong, especially in the technology sector. Analog Devices has agreed to buy Linear Technology for $14.8 billion and Oracle is buying cloud-services provider NetSuite for $9.3 billion. Also, Citrix is merging its GoToMeeting unit with LogMeIn. We expect mergers to continue as long as companies have access to cheap financing to fund growth.
* This commentary reflects the opinions of Welch & Forbes based on information that we believe to be reliable. It is intended for informational purposes only, and not to suggest any specific performance or results, nor should it be considered investment, financial, tax or other professional advice. It is not an offer or solicitation.
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