As some of you may know, September is Childhood Cancer Awareness Month. For those of you who may have missed it, you can catch the new St. Jude interview with Laura and myself below from Wednesday!
Our entire Diazo team will also be participating in the St. Jude Run/Walk happening on Saturday, September 23rd at Town Square. If you'd like to join to walk with Team Diazo Wealth, you can sign up by clicking here.
And now onto the weekly recap:
The Dow Jones Industrial Average eked out a slim gain this week while the S&P 500 and Nasdaq saw modest declines. The beginning of the week was quiet in terms of market-moving events and somewhat light on participation. The second half of the week featured plenty of market-moving events, capped off with a quarterly options and futures expiration day on Friday. Downside moves had the S&P 500 and Nasdaq close below their 50-day moving averages.
The major indices had been on track for a winning weak until Friday's retreat. Despite a lower finish at the index level, eight of the 11 S&P 500 sectors closed with a gain. Information technology, which is the most heavily weighted sector, declined 2.2%.
Apple (AAPL) was a top laggard from the info tech sector, dropping 1.8% this week amid reports of ongoing scrutiny in China and following its product event that featured the introduction of the iPhone 15. Adobe (ADBE) was another weak component, dropping 5.6% following its underwhelming fiscal Q4 guidance.
Weak semiconductor constituents also contributed to the sector's underperformance. That weakness followed Arm's (ARM) successful IPO on Thursday and aReutersreport that Taiwan Semiconductor Manufacturing Co. (TSM) is delaying chip equipment shipments. The PHLX Semiconductor Index fell 2.5%.
Netflix (NFLX), which is among the top performers this year, tumbled 10.4% this week after its disclosure that the ad business is not material yet to its overall revenue.
The collective weight of large cap losses weighed heavily on index performance. The Vanguard Mega Growth ETF (MGK) declined 0.8% while the market-cap weighted S&P 500 fell 0.2%. Meanwhile, the Invesco S&P 500 Equal Weight ETF (RSP) fell by a modest 0.1%.
There were some other corporate news items that drove selling activity, including Spirit Airlines (SAVE), Frontier Group (ULCC), Delta Air Lines (DAL), and American Airlines (AAL) all warning about their Q3 outlooks partially due to rising fuel costs.
Additionally, the United Auto Workers launched targeted strikes at three manufacturing plants (one for each of the Big Three) after being unable to reach a deal on a new contract with the automakers. Ford (F), Stellantis (STLA), and General Motors (GM) still closed with gains of 2.5%, 5.6%, and 3.0%, respectively, this week.
Market participants also digested a slate of economic releases. Chief among them was the August Consumer Price Index report. Briefly, total CPI was up a robust 0.6%, as expected, and core-CPI, which excludes food and energy, was up 0.3% (Briefing.com consensus 0.2%). That left total CPI up 3.7% year-over-year, versus 3.2% in July, and core CPI up 4.3% year-over-year, versus 4.7% in July.
The key takeaway from the report is that core inflation, which is what the Fed monitors more closely, showed ongoing improvement on a year-over-year basis; however, it is still well above the Fed's 2.0% target, reflecting a sticky quality that probably won't compel the Fed to raise rates further at this point, but which will certainly keep the Fed in a "higher for longer" mindset.
Treasuries handled this week's inflation data reasonably well, which was supportive of stocks. Yields drifted higher, but moves weren't panicky. The 2-yr note yield rose seven basis points this week to 5.04%. The 10-yr note yield rose seven basis points this week to 4.33%.
Rising oil prices remained top of mind this week. WTI crude oil futures jumped 4.2% to $91.00/bbl.
As a reminder, the Fed meets next week with a policy decision announcement at 2:00 p.m. ET on Wednesday. Market participants are not expecting a rate hike and will be more focused on the updated Summary of Economic Projections and the tone that Fed Chair Powell takes at his press conference.
Below are truncated summaries of daily action:
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.