Portal Login
Schedule Call
Menu
Portal Login
Schedule Call
shutterstock_1444184525_blue

Weekly Market Updates

We’re not just here to manage your wealth. We’re here to help you understand how your money is being invested.

Weekly Market Update 08/21/2022

by Justin J. Long CFP®, on Aug 21, 2022

This week brought more monsoons to the Las Vegas Valley. This August we have recorded only six days of triple-digit temperatures, the National Weather Service said in a tweet Wednesday. The agency said the August record for fewest number of 100 degree days is 14.

In other valley news, the rumors are heating up about Lebron James as an owner of an NBA franchise expansion team here as soon as 2025. Speaking of heating up, the Las Vegas Raiders are now 3-0 in their pre-season with one game remaining next week against the New England Patriots.

To share a bit of a #prouddad moment, our son, Gage, who is headed into the 5th grade, has tested into gitfted and talented for Math and Science. This means he will be taking 7th grade courses in the 5th grade, while also taking his first computer programming classes this year.

And now on to the recap of this week:

Weekly Wrap

A four-week winning streak for the market came to an end this week. The simple reason why is that the market was overbought on a short-term basis and due for a pullback. Of course, there was more to it than that.

For the week, the Russell 2000 was down 2.9%, the Nasdaq Composite was down 2.6%, the S&P 500 was down 1.2%, and the Dow Jones Industrial Average was down just 0.2%.

Lost in that losing mix is the recognition that the S&P 500 was up as much as 1.1% for the week on Tuesday at 4,325.28. That was a whisker shy of its 200-day moving average, which provided some stern resistance and acted as a barrier to follow-through buying efforts.

For many, it became the appropriate stopping point to take some money off the table following a spirited run that saw the S&P 500 gain 18.9% between its low on June 17 and that Tuesday high. There were some news catalysts in the mix this week that contributed to that mindset.

  • China reported a weaker-than-expected batch of retail sales, industrial production, and fixed asset investment data for July.
  • The NAHB Housing Market Index for August fell to 49 (a reading below 50 is considered to be negative sentiment), marking the eighth straight monthly decline in the index.
  • The Empire State Manufacturing Survey for August sunk to -31.3 from 11.1, which was one of the lowest readings on record.
  • July Housing Starts were weaker than expected.
  • Total retail sales in July were unchanged from June.
  • Existing home sales declined 5.9% month-over-month in July, marking the sixth straight month of declines.
  • St. Louis Fed President Bullard (2022 FOMC voter) said he is still leaning in favor of a 75-basis point rate hike at the September FOMC meeting.
  • Minneapolis Fed President Neel Kashkari (2023 FOMC voter) said he does not know if the Fed can bring down inflation without triggering a recession.
  • Target (TGT) and Kohl's (KSS) reported weaker than expected earnings results and Analog Devices (ADI) and Applied Materials (AMAT) had some cautious commentary on recent business activity, offsetting some of the positivity stemming from better-than-expected reports out of Home Depot (HD), Walmart (WMT), and Cisco (CSCO).
  • UK inflation hit a 40-yr high of 10.1% year-over-year in July.
  • Germany's Producer Price Index was up 37.2% year-over-year in July, which was the highest reading in more than 70 years.

As one can see, there was a heavy economic drag throughout the week that served as a reminder that the market might have gotten ahead of itself with its rebound enthusiasm. In the same vein, a 10-yr note yield pushing 3.00% was a testament to underlying inflation angst and a renewed headwind for many growth stocks that had logged big gains off the June lows.

The Russell 1000, 2000, and 3000 Growth Indexes were down 1.7%, 3.1%, and 1.8%, respectively, this week versus losses of 1.2%, 2.8%, and 1.3% for the Russell 1000, 2000, and 3000 Value Indexes, respectively. The Vanguard Mega-Cap Growth ETF (MGF) fell 2.1%.

The losses across the board for the Growth and Value Indexes underscores the relatively broad-based pullback that occurred this week. To be fair, though, most of the damage came on Friday's options expiration day. Entering Friday, the S&P 500 was up less than 0.1% for the week.

There was some fallout on Friday in the meme stock space that served as a reality check of the speculative excess that had been building there throughout the week and certainly since the mid-June lows. Bed Bath & Beyond (BBBY) was the epicenter of Friday's movement, plunging 40.5% in response to a report that Ryan Cohen's RC Ventures had sold its entire stake and a Bloomberg Law article that suggested Bed Bath & Beyond has hired Kirkland & Ellis to help address matters pertaining to the company's debt load.

The weakness in the meme stocks spilled into the broader market as a selling catalyst along with the 10-yr note yield's test of 3.00%.

For the week, eight of the 11 S&P 500 sectors finished lower with losses ranging from 0.6% (health care) to 3.3% (communication services). The winning standouts were consumer staples (+1.9%), utilities (+1.0%), and energy (+1.0%).

  • Dow Jones Industrial Average: -7.2% YTD
  • S&P Midcap 400: -9.3% YTD
  • S&P 500: -11.3% YTD
  • Russell 2000: -12.8% YTD
  • Nasdaq Composite: -18.8% YTD
INDEX STARTED WEEK ENDED WEEK CHANGE % CHANGE YTD %
DJIA 33761.05 33706.74 -54.31 -0.2 -7.2
Nasdaq 13047.19 12705.22 -341.97 -2.6 -18.8
S&P 500 4280.15 4228.48 -51.67 -1.2 -11.3
Russell 2000 2016.62 1957.35 -59.27 -2.9 -12.8

 

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.

Source: https://www.schwab.com/resource-center/insights/content/schwab-market-update 

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:FiduciaryFinancial PlanningMarkets

Diazo Weekly Market Updates

At Diazo Wealth Management we strive to provide relevant and value-added content to help our current and future clients stay updated on news that impacts markets.

Subscribe to Updates