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Weekly Market Update 7/3/2021

by Justin Long, on Jul 03, 2021

I hope everyone is enjoying the beginning of the extended weekend. Independence is a concept that has changed for me over the last few years, at least from a business perspective. It was a very big leap for myself, my family, my business, and of course, you, my clients, for me to go out on my own and start my own business.  Ultimately, the freedoms that going independent has provided was the driving factor in my decision.  I am so grateful for the ability to deeply serve you in ways I could not before — and for you, coming on this journey with me.

The Fourth of July has always been my favorite holiday since I was a kid. There is something about the carefree days of summer, the barbecues, water days, and family face time that makes it stand out among them all.

Now, as an adult, I have even more reason to enjoy the holiday. Our two sons love fireworks (no surprise there), and seeing the awe in your children's faces is priceless.  This year, our four-year-old, JJ, is old enough that he will make his firework lighting debut (with my assistance, of course) and he could not be more excited. On another personal note, tomorrow marks my and Laura's 6th wedding anniversary. Anyone who has heard me talk about her knows that, in my opinion, it is only fitting that the whole country lights fireworks to celebrate on the day we said 'I do'.

How are you spending the holiday weekend?

And now on to the recap of this week:

Weekly Market Summary

U.S. stock indexes rallied on Monday, and the positive momentum extended through most of the week, lifting the S&P 500 and the NASDAQ above previous record highs set in early May and late April. Overall, the S&P 500, the NASDAQ, and the Dow added roughly 3% for the week.

The S&P 500, which gained 1.7%, extended its streak to seven straight record closes, and topped the 4300 level with ease. The Nasdaq Composite outdid the benchmark index with a 1.9% gain and its own set of record-setting performances. 

The Dow Jones Industrial Average advanced 1.0% and closed at its first record high since May, while the Russell 2000 fell 1.2% amid rebalancing factors. 

Eight of the 11 S&P 500 sectors contributed to the advance, led by information technology (+3.2%), consumer discretionary (+2.1%), and communication services (+1.9%). The energy (-1.1%), financials (-0.1%), and utilities (-0.02%) sectors closed lower. 

Interestingly, the Russell 1000 Growth Index rose 2.4% while the Russell 1000 Value Index (comprised of many cyclical stocks) increased just 0.4% despite a host of positive developments: 

  • June nonfarm payrolls increased by 850,000 (Briefing.com consensus of 680,000)
  • The June ISM Manufacturing Index checked in at 60.6% (Briefing.com consensus 61.0%) for its 13th straight month above 50.0% (expansionary activity)
  • The Conference Board's Consumer Confidence Index for June was better-than-expected at 127.3 (Briefing.com consensus 120.0)
  • Weekly initial claims declined to a post-pandemic low of 364,000 (Briefing.com consensus 400,000)
  • Many banks increased their dividend payments after easily passing the Fed's stress test in the prior week
Jobs Report

The employment report, however, wasn't as strong as the headline jobs figure initially suggested. The unemployment rate (5.9%), average hourly earnings (+0.3%), and the average workweek (34.7) missed expectations. In addition, the labor force participation rate (61.6%) was unchanged, and there were higher rates of unemployment for minority groups.

What's more, there were reported growth concerns linked to the spread of the Delta coronavirus variant and the restrictions several countries imposed to curb infections. On a related note, Johnson & Johnson (JNJ) said its COVID-19 vaccine showed persistent activity against the Delta variant with long-lasting durability of response.

Fed's Inflation Outlook

A week after U.S. Federal Reserve members lifted their inflation forecast at their latest policy meeting, Fed Chairman Jerome Powell largely downplayed inflation concerns in testimony before Congress. Powell said he continues to believe that the recent spike in consumer prices will eventually ease, although he did acknowledge economic uncertainty will persist as pandemic restrictions are lifted. 

These growth concerns were manifested in the 11-basis-point decline in the 10-yr yield (1.43%), which acted as a tailwind for the growth stocks -- especially the mega-caps. The Vanguard Mega Cap Growth ETF (MGK) rose 2.6% this week. Facebook (FB) reached a $1 trillion market capitalization, and NVIDIA (NVDA) reached a $500 billion market capitalization. 

Oil's Rise

U.S. crude oil prices climbed for the fifth week in a row, rising 4% and reaching $74 per barrel—the highest level since October 2018. As recently as early April, oil was trading below $60. 

Separately, WTI crude futures topped $75 per barrel amid speculation that OPEC+ will agree to a smaller-than-expected increase in supply, starting in August. An agreement was supposed to be reached on Thursday, but the week ended without an agreement. 

Infrastructure Breakthrough?

After months of negotiations, President Biden and a bipartisan group of senators announced an agreement on a roughly $1 trillion plan to improve the nation’s physical infrastructure. The White House will now try to move the package through Congress alongside a broader measure sought by Democrats that extends to nontraditional forms of infrastructure.

As always, it is my pleasure to bring you this weekly update. If this or anything else is causing you pause or you would like further details, please feel free to reach out to me and we can schedule some time to chat. 

Justin J. Long CFP®
Founder/Lead Advisor
Diazo Wealth Group
702-745-1800 Direct
702-278-6560 Cell

Upcoming Economic Calendar

Real Time Economic Calendar provided by Investing.com.

Source: 1. FactSet

Source: Week in perspective provided by Briefing.com. Briefing.com offers live market analysis on their web site www.Briefing.com.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States. It is not possible to invest directly in an index.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (bps). One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

Innovative Adviser Solutions, LLC, a registered investment adviser, dba Diazo Wealth


Topics:Financial Planning

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