Just a week ago we were here congratulating you on surviving a fairly anti-climactic Hurricane Hilary, just to be hit by actual flooding from your status quo monsoon season scattered rainstorms in the valley yesterday. We hope everyone is safe and dry going into the weekend!
In the Long house, Gage and JJ started their first day of 6th grade and 1st grade, respectively. As usual, it was a chaotic but blessing-filled first week back.
And now onto the weekly recap:
It was a fairly strong week for stocks that results in decent gains for the major indices. Some softer price action at the end of the week was offset by sizable gains in the first half of the week. Including last Friday, the major indices registered four consecutive winning sessions at Wednesday's close. This week's upside moves had the S&P 500 reclaim a position above its 50-day moving average.
Broad based gains reflected market participants' willingness to buy on weakness, aided by a big drop in market rates. Overall, there just wasn't a lot of conviction on the part of sellers. Many of this week's sessions featured below-average, which is not out of the ordinary for the last week of August ahead of Labor Day weekend.
Mega cap stocks took charge, benefitting from the drop in market rates. The Vanguard Mega Cap Growth ETF (MGK) rose 3.6% this week and the Invesco S&P 500 Equal Weight ETF (RSP) rose 2.3%.
The 2-yr note yield fell 17 basis points this week to 4.88% and the 10-yr note yield fell seven to 4.17%. Those moves were in response to a batch of economic data that wasn't too bad, but wasn't too good either. Slightly weaker than expected economic reports were a good thing in the market's eyes as it relates to Fed policy. That is to say, market participants have been waiting for data to corroborate the notion that the Fed won't raise rates again.
The economic calendar this week featured the August Consumer Confidence Index, July JOLTS - Job Openings Report, the second estimate for Q2 GDP, July Personal Income and Spending, the August ISM Manufacturing Index, and the August Employment Situation Report.
A big move in oil prices was lurking under the radar this week. WTI crude oil futures jumped 2.3% on Friday, which brought this week's percentage gain to 7.8%, to $85.55/bbl. That move in oil prices underpinned strength in the S&P 500 energy sector, up 3.8% this week, but also raised eyebrows as it relates to inflation staying persistently high.
Aside from energy, the information technology (+4.4%), consumer discretionary (+3.0%), and communication services (+3.5%) sectors saw the largest gains. The countercyclical utilities (-1.7%) and consumer staples (-0.3%) sectors were the lone holdouts to close with a loss this week.
On the earnings front, Dow component Salesforce (CRM) was a standout winner following its quarterly results and guidance. Retailers Dollar General (DG) and Five Below (FIVE) sank after reporting quarterly results that featured below-consensus guidance while Best Buy (BBY) and lululemon athletica (LULU) jumped after their earnings report.
As a reminder, equity and bond markets will be closed on Monday for Labor Day.
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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.