Market Update - July 1

It was a winning week all around -- literally. All 11 S&P 500 sectors finished higher; the major indices all finished higher; and the value stocks as a class finished higher as did the growth stocks.

At this juncture, it will surprise no one to hear that the mega-cap stocks as a class also finished higher. For the week, the Vanguard Mega-Cap Growth ETF (MGK) was up 2.0%. More importantly, though, the Invesco S&P 500 Equal-Weight ETF (RSP) outperformed the mega-cap ETF, gaining 3.4% this week in a show of broad-based buying interest.

It was a fitting end to a month that saw the market-cap weighted S&P 500 break out above 4,200... then 4,300... and then 4,400 before settling the quarter at 4,450. The Nasdaq Composite for its part recorded its best first half (+31.7%) since 1983!

This week had it all going on.

• There was a reported coup attempt in Russia (which ended almost as quickly as it began).
• There was a batch of encouraging economic data (May Durable Goods Orders, June Consumer Confidence, May New Home Sales, Weekly Initial Jobless Claims, the upward revision to Q1 GDP, and the May Personal Income and Spending).
• There were reminders from Fed Chair Powell, ECB President Lagarde, and BoE Governor Bailey that more tightening will likely be needed to bring down inflation.
• There was a batch of IPOs (yes, you heard that right).
• There was the release of the Federal Reserve's annual bank stress test results, which all 23 banks taking the test passed.
• There were earnings results -- some good and some bad -- from the likes of Carnival Corp. (CCL), Walgreens Boots Alliance (WBA), General Mills (GIS), Micron (MU), and Nike (NKE).

The constant through it all was an unshaken belief that the U.S. economy can avoid a recession and that the Federal Reserve is close to being done raising rates. That perspective underpinned the broad-based buying interest.

Notably, the sectors that were relative laggards this week were the countercyclical consumer staples (+0.6%), health care (+0.6%), and utilities (+0.7%) sectors. To be fair, communication services (+0.4%) was the least strong of all, having been pressured by a 1.7% decline in Alphabet (GOOG), which was downgraded at UBS on Monday and at Bernstein on Tuesday.

Real estate (+5.0%) and energy (+4.8%) were the best-performing sectors this week followed by materials (+4.0%), industrials (+3.9%), financials (+2.9%), information technology (+2.9%), and consumer discretionary (+2.5%).

The Treasury market had a different experience, digesting another round of new supply and the bullish behavior of the stock market that might have spurred some asset reallocation trades. The 2-yr note yield increased 13 basis points this week to 4.88% while the 10-yr note yield rose eight basis points to 3.82%.

As a reminder, the stock market will be closing early at 1:00 p.m. ET on July 3 in observance of Independence Day. Markets will be closed on Tuesday, July 4.

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.