Thanks to all our wonderful family, friends, and especially clients, Diazo Wealth was one of the top fundraising teams for the St Jude walk/run. Myself and the team here at Diazo appreicate everyone's support in our efforts to raise awareness throughout Childhood Cancer Awareness Month.
We are excited for our next community event, our "Movie Night at the Ballpark"- invites are going out to everyone and we look forward to seeing those that have RSVP'd so far. Checkout the event here: Movie Night at the Ballpark
And now onto the weekly recap:
The stock market settled the week mixed at the index level. Some rebound attempts throughout the week left the Nasdaq and Russell 2000 with slim gains while the Dow Jones Industrial Average and S&P 500 declined 1.3% and 0.7%, respectively. This is a growing belief that the stock market is due for a bounce after suffering steep losses in September, but rising long-term rates kept stocks in check.
The 10-yr note yield jumped 13 basis points this week, and 48 basis points this month, to 4.57%. The 2-yr note yield declined eight basis points this week, and rose 18 basis points this month, to 5.04%.
The concern for stock market participants is not necessarily the size of the rate increases, but rather the pace at which rates are moving. In addition, the jump in rates more recently doesn't appear to be tied to a fear of more rate hikes by the Fed.
The fed funds futures market sees only a 14.2% probability of a 25-basis points rate hike at the November FOMC meeting, versus 27.5% a week ago and 62.3% a month ago, according to the CME FedWatch Tool.
That understanding may create some angst about what else is driving the Treasury market. Some other factors include: the Fed having a long way to go still with its QT efforts, other central banks possibly selling Treasuries in a bid to support their currencies, and concerns about the budget deficit issue.
In addition to the move in interest rates, seasonality was cited as another potential factor weighing over the market. September, historically, has been the worst month of the year for the S&P 500.
Market participants received some economic data this week, including a weaker than expected August new home sales report, a low level of weekly jobless claims, and some pleasing inflation data in the form of the core-PCE Price Index for August.
WTI crude oil futures jumped more than $7.00/bbl this month, settling Friday's session at $90.78/bbl, which stoked lingering concerns about inflation expectations, rising gas prices, and a slowdown in consumer spending.
The rate-sensitive S&P 500 utilities sector saw the largest decline this week by a decent margin, falling 7.0%. The next worst performer was the consumer staples sector (-2.1%). Only the energy (+1.3%) and materials (+0.2%) sectors registered gains on the week.
| INDEX | STARTED WEEK | ENDED WEEK | CHANGE | % CHANGE | YTD % |
|---|---|---|---|---|---|
| DJIA | 33963.80 | 33507.50 | -456.30 | -1.3 | 1.1 |
| Nasdaq | 13211.80 | 13219.30 | 7.50 | 0.1 | 26.3 |
| S&P 500 | 4320.06 | 4288.05 | -32.01 | -0.7 | 11.7 |
| Russell 2000 | 1776.50 | 1785.10 | 8.60 | 0.5 | 1.4 |
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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.