July was a bit of a roller coaster ride for the domestic stock market, as it grappled with the ongoing U.S.-China trade war, economic data that points to a slowing global economy and the expected interest-rate cut by the Federal Reserve at the end of the month.
For the month in full, each of the major stock market indexes finished higher month-over-month, but exited July off their highs for the month. Those low single-digit gains led those indexes to add to their year-to-date moves higher, but even so at the end of July the S&P 500, Dow Jones Industrial Average and the small-cap heavy Russell 2000 all lagged the Real Money Post-Industrial Average (RMPIA) on a year-to-date basis.
In July, the RMPIA climbed 0.6%, bringing its year-to-date return to just over 21%. In examining RMPIA's constituents, just over half marched higher in July, led by shares of Starbucks (SBUX) , Alphabet (GOOGL) , Apple (AAPL) , Medtronic (MDT) , Costco Wholesale (COST) , and Accenture (ACN) . Offsetting those gains, RMPIA's July performance was weighed down by the sharp move lower in Netflix (NFLX) shares as well as declines at Thermo Fisher Scientific (TMO) , and Allergan (AGN) .
Through the end of July, 13 of RMPIA's constituents outperformed all four major market indexes year-to-date, including the 23.2% rise in the Nasdaq Composite Index. Despite rebounds of varying degrees in July for Kraft Heinz (KHC) , CVS Health (CVS) , Amgen (AMGN) and Biogen (BIIB) , all four remained a drag alongside Walgreens Boots Alliance (WBA) and Regeneron Pharmaceuticals (REGN) on RMPIA's year-to-date performance.
As we are starting to wind down the June-quarter earnings season, coming into this week more than three-quarters of the S&P 500 group of companies had reported those quarterly figures. Tallying those results, we've seen earnings-per-share expectations for the current quarter fall, resulting in full year 2019 earnings per share expectations for that cohort of 500 companies rising just 2.7%, compared to 2018. By comparison, RMPIA's constituents are slated to grow their collective earnings per share by more than 9% this year, compared to 2018. And that figure reflects the prospects for year-over-year earnings-per-share declines at Facebook (FB) , Qualcomm (QCOM) and Kraft Heinz.
While we very much like the overall vector and velocity of RMPIA's collective earnings-per-share growth this year, as well as the 2020 prospects, we'll continue to monitor U.S.-China trade developments, as well as the speed of the global economy in the coming weeks and months.
The goal will be to assess their impact on the market and investor expectations, as well as RMPIA's constituents. Odds are we will continue to face an uncertain market that could get volatile, but investors can find comfort in RMPIA's long-term focus, which has allowed it to climb more than 53% since its inception, well above the 30% return for the Dow and 42% for the S&P 500 over the same time frame.
Amgen, CVS, Apple, Alphabet, and Facebook are holdings in Jim Cramer's Action Alerts PLUS member club.
