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Weekly Market Update 7/10/2021

by Justin Long, on Jul 10, 2021

We've made it to the end of another hot week here in Las Vegas, and the upcoming week is supposed to be a record breaker! I hope you are all keeping cool and hydrated during these times. 

This week, Laura and I are escaping the heat and taking the kids up to Big Bear Lake, CA.  It will be our first time ever visiting, and we are looking forward to the cooler temperatures and lots of water time — boating, kayaking, and fishing. We are also bringing our 1-year-old, 175lbs Cane Corso puppy, Knight, along so it is sure to be an adventure.

Of course, I will be available for anything that comes up, so do not hesitate to reach out. So long as I am not submerged in water, I will answer; otherwise I will reach out as soon as I am dry!

What ways are you unplugging this summer?

And now on to the recap of this week:

Weekly Market Summary

The S&P 500 (+0.4%), Dow Jones Industrial Average (+0.2%), and Nasdaq Composite (+0.4%) eked out small gains and ended the week in record territory. The small-cap Russell 2000 struggled this week and declined 1.1%. 

The S&P 500 consumer discretionary (+1.5%) and real estate (+2.6%) sectors finished with strong gains and were the only sectors that rose more than 1.0%. Conversely, the energy (-3.4%), communication services (-0.4%), and financials (-0.6%) sectors were the only sectors that closed lower. 

The trading week was shortened to four days in observance for July 4th on Monday, so the week's action started on Tuesday when the S&P 500 snapped a streak of seven straight record closes. Reportedly, investors were worried about peak growth due to a deceleration in the June ISM Non-Manufacturing Index and the spread of the Delta Covid variant. 

Stock Style Tug of War

The second quarter produced a reversal in U.S. market leadership between the value and growth equity styles. An index of large-cap growth stocks returned nearly 12%, while its value counterpart added just over 5%. However, value remained the leader through the first half of 2021 with a 17% return to growth’s 13%, as value outperformed in the first quarter. 

To be fair, growth concerns seemed legitimate on Thursday after Japan extended its coronavirus state of emergency through Aug. 22 (barring spectators from the Olympics), and reports indicated the People's Bank of China (PBOC) could soon cut the required reserve ratio for banks due to slower growth expectations. The PBOC did just that by 50 bps on Friday. 

Treasuries Continue to Pullback 

Stocks and Treasury yields recovered a bit on Thursday and continued their rebound bids on Friday, with some attributing technical factors and a buy-the-dip mindset for the resilient price action. At the end of the sloppy week, the growth stocks stood atop the leaderboard while the value stocks lagged: the Russell 1000 Growth Index rose 1.0%, and the Russell 1000 Value Index declined 0.3%.

The 10-yr yield ended the week at 1.36%, or seven basis points below last Friday's settlement. 

Inflation Comes into Focus 
  • The markets focused on rising inflation earlier this year, with consumer prices rising at the fastest rate in three decades1.
  • Inflation has spiked amid a surge in consumer demand that outpaced supply. We saw supply chain disruptions and labor shortages, sharp increases in commodity prices such as lumber, and the base effects of year-on-year comparisons to the depths of the shutdown.
  • The Fed has maintained its view that this jump in inflation will be temporary, reiterating its commitment to keeping stimulus in place to support an enduring economic rebound.
Oil Hits a High 

Interestingly, WTI crude futures briefly hit a six-year high above $76 per barrel after OPEC+ was unable to agree to further production increases. On a related note, the EIA reported its seventh-straight weekly inventory draw. 

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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