Weekly Market Update 06/12/2021

Our Vegas Golden Knights won 4 straight games to defeat the Colorado Avalanche this week, and move on to the semi-finals for the third time in four years. There is something to be said about seeing a sold-out crowd at T-Mobile Arena. To my personal delight, there are rumors abound about Las Vegas acquiring both an NBA team and a Major League Baseball team; if their crowds and energy are anything like our Knights, Las Vegas is primed to be a top-tier sports city.

In other news, our city also cut the ribbon on the $1 billion LVCVA expansion on Tuesday. Hosting World of Concrete in a three-day construction industry conference, it was the first large-scale convention trade show to occupy Las Vegas in 15 months.

Attendees were also the first conference delegates to utilize The Loop, a mile-and-a-half-long underground transportation system that shuttles conference and tradeshow attendees through the Convention Center’s 200-acre campus in less than two minutes – a task that on foot takes up to 25 minutes. The system runs 40 feet beneath the ground and was constructed by billionaire Elon Musk’s The Boring Co. for $52.5 million and utilizes Tesla vehicles.

I know I don't need to remind you just how decimated Las Vegas was by the pandemic. It is refreshing to see what our city's version of the "new normal" is over these last two weeks since fully reopening. We've known for quite some time just how resilient our city is when challenged, and the added innovation happening now is a bonus.  What changes in our city are you most excited about?

Now on to the summary for the week -

U.S. Equities

U.S. equities finished out another choppy week with modest gains, while mixed on a weekly basis. Investors continued to focus on signs of rising inflation pressures and what that could hold for the timing of the Fed to begin tapering its asset purchases. The S&P 500 was able to notch a fresh record high for the second-straight day, and Information Technology issues continued to regain some footing to help the Nasdaq register a solid weekly advance.

The Dow Jones Industrial Average rose 13 points to 34,480, the S&P 500 Index advanced 8 points (0.2%) to 4,247 and the Nasdaq Composite increased 49 points (0.4%) to 14,069. In moderate volume, 825 million shares were traded on the NYSE and 4.1 billion shares changed hands on the Nasdaq. WTI crude oil rose $0.62 to $70.91 per barrel. Elsewhere, the Bloomberg gold spot price tumbled $21.57 to $1,876.94 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—jumped 0.5% to 90.53. Markets were mixed for the week, as the DJIA lost 0.8%, the S&P 500 gained 0.4%, and the Nasdaq Composite rose 1.9%.

Healthcare in Focus

However, weakness in Health Care stocks is what kept the indices in a tight range. The economic calendar closed out the week on a light note, offering a lone report that showed June consumer sentiment improved more than expected, getting a boost from the expectations component, while also noting that inflation expectations moderated.

In equity news, shares of Vertex Pharmaceuticals tumbled after it ended its pursuit to develop a therapy for liver disease, and Snowflake's longer-term financial targets garnered some scrutiny from analysts. Treasuries were lower to pare some of the week's decline in yields and the U.S. dollar gained solid ground, while gold fell and crude oil prices finished higher. Europe closed out the week with broad gains, while markets in Asia were mixed.

Sector Focus

From a sector perspective, the S&P 500 real estate (+2.0%), health care (+1.9%), information technology (+1.4%), and consumer discretionary (+1.6%) sectors finished the week as leaders. The latter was propped up by a 4% gain in Amazon.com (AMZN). 

On the other hand, the cyclical financials (-2.4%), materials (-2.0%), and industrials (-1.7%) sectors declined around 2.0%. 

The underperformance of the cyclical stocks was partially due to profit-taking interest and an underlying belief that the economy is running into peak growth rates. The latter viewpoint was indirectly corroborated by the Treasury market, which appeared to be sticking with the peak inflation thesis. 

Fixed Income and the Fed 

Specifically, the 10-yr yield fell ten basis points this week to 1.46%, even though total CPI was up 0.6% m/m in May (Briefing.com consensus 0.4%) and up 5.0% yr/yr. Interestingly, even the stock market liked the report as it ran with the peak inflation argument expressed by Treasuries. 

Speculative stocks did well, too, presumably on the understanding that the Fed isn't in a rush to tighten or communicate it will tighten policy. Economics polled byReuters expected the Fed to officially announce a plan to taper asset purchases in August or September. 

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

Source: 1. FactSet

Source: Week in perspective provided by Briefing.com. Briefing.com offers live market analysis on their web site www.Briefing.com.

Innovative Adviser Solutions, LLC, a registered investment adviser, dba Diazo Wealth