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Weekly Market Insights

The Markets (as of market close July 30, 2021)

Equities retreated last week despite strong corporate earnings data. European and Asian stocks slid following China's regulatory crackdown aimed at large tech companies. Although corporate earnings generally have been solid, last Friday's lower-than-expected earnings results from some heavily weighted megacaps may have caused some uncertainty about the pace of economic growth. By the close of last week, tech shares fell, pulling the Nasdaq down 1.1%, with the large caps of the Dow and the S&P 500 each declining 0.4%. The small caps of the Russell 2000 climbed 0.8%, while the Global Dow rose 0.4%. Crude oil prices climbed 2.4% to $73.81 per barrel. Gold prices rose nearly 1.0%, while the dollar dipped 0.8%. The yield on 10-year Treasuries decreased 5 basis points. Materials (2.8%) and energy (1.6%) led the market sectors.

Last week began with each of the benchmark indexes posting gains on Monday, as concerns over the resurgent spread of the coronavirus were outweighed by a positive start to corporate earnings season. The Global Dow added 0.7%, followed by the Russell 2000, which edged up 0.3%. The large caps of the Dow and the S&P 500 each gained 0.2%, while the Nasdaq ticked up by less than 0.1%. Treasury yields and the dollar dipped. Crude oil prices climbed marginally higher. The market sectors were mixed, with energy the clear mover after advancing 2.5%. Among the remaining sectors, communication services, consumer discretionary, and materials gained between 0.7% and 0.9%.

The market reversed course last Tuesday as megacap technology stocks tumbled. The Nasdaq posted its largest decline in nearly two months after slipping 1.2%. The S&P 500 fell 0.5%, while the Dow dipped 0.2%. The small caps of the Russell 2000 lost 1.1% and the Global Dow declined 0.2%. Several global markets dipped lower following China's imposition of a regulatory campaign aimed at the country's largest tech companies. The drop in tech stocks in China may be having a carryover effect on similar stocks in the United States. The sectors finished mostly lower, with information technology and energy falling 1.0%, while consumer discretionary fell 1.2%. Treasury yields, the dollar, and crude oil prices fell.

Stocks closed last Wednesday mixed, with the Russell 2000 (1.5%), the Nasdaq (0.7%), and the Global Dow (0.1%) edging higher, while the large caps of the Dow fell 0.4%. The S&P 500 ended the day essentially unchanged. The dollar dipped lower, while Treasury yields and crude oil prices rose. Energy and communication services led the market sectors, while consumer staples fell. Strong earnings reports and the Federal Reserve's statement that accommodative measures will remain in place for some time helped drive stocks higher. Still, concern remains that the global spread of the COVID-19 Delta variant could slow economic recovery.

Each of the benchmark indexes listed here advanced last Thursday following a favorable gross domestic product report and declining unemployment claims. The Global Dow led the way, climbing 0.9%, followed by the Russell 2000 (0.7%), the Dow and the S&P 500 (0.4%), and the Nasdaq (0.1%). The dollar fell, while crude oil prices and the yield on 10-year Treasuries advanced. Communication services (-0.9%) and real estate (-0.2%) were the only market sectors to decline. Financials and materials led the advancing sectors, each increasing 1.1%.

Stocks fell to close the week last Friday, with each of the benchmark indexes losing ground. The Global Dow dipped 0.9%, followed by the Nasdaq (-0.7%), the Russell 2000 (-0.6%), the S&P 500 (-0.5%), and the Dow (-0.4%). The yield on 10-year Treasuries decreased, while the dollar and crude oil prices advanced. Among the sectors, consumer discretionary dropped 2.8% and energy slid 1.8%.

The national average retail price for regular gasoline was $3.136 per gallon on July 26, $0.017 per gallon less than the prior week's price but $0.961 more than a year ago. Gasoline production increased during the week ended July 23, averaging 9.8 million barrels per day, up from the prior week's average of 9.1 million barrels per day. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended July 23; this was 132,000 barrels per day less than the previous week's average. For the week ended July 23, refineries operated at 91.1% of their operable capacity, down from the prior week's level of 91.4%.

Market/Index

2020 Close

Prior Week

As of 7/30

Weekly Change

YTD Change

DJIA

30,606.48
 35,061.55 34,935.47  -0.36% 14.14%

Nasdaq

12,888.28

14,836.99 14,672.68
-1.11%

13.85%

S&P 500

3,756.07

4,411.79

4,395.26

-0.37%

17.02%

Russell 2000

 1,974.86 2,209.65

2,226.25

0.75% 12.73%

Global Dow

3,487.52

3,966.19

3,981.32 0.38%

 

14.16%

Fed. Funds target rate

0.00%-0.25%

0.00%-0.25%

0.00%-0.25%

0 bps

0 bps

10-year Treasuries

0.91%

1.28%

1.23%

-5 bps

32 bps

US Dollar-DXY

89.84

92.88

92.14

-0.80%

2.56%

Crude Oil-CL=F

$48.52 $72.08 $73.81 2.40% 52.12%

Gold-GC=F

$1,893.10

$1,802.10 $1,816.70 0.81%

 

-4.04%
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

 

Last Week's Economic News

  • The Federal Open Market Committee met last week and noted progress on vaccinations, while indicators of economic activity and employment have continued to strengthen. Inflation has been rising, largely reflecting transitory factors. Despite these positive developments, the Committee noted that financial conditions remain accommodative. In lieu thereof, the Committee decided to maintain the target range for the federal funds rate at 0.00%-0.25%. In addition, the Committee will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals.
  • The initial, or advance, estimate of second-quarter gross domestic product showed the pace of economic growth was little changed at 6.5%, up marginally from the 6.3% annualized growth rate of the first quarter. Consumer spending, up 11.8%, was the largest contributor to the second-quarter growth. Consumer spending on services (led by food services and accommodations) rose 12.0% as the economy continued to reopen. Current-dollar GDP increased 13.0% at an annual rate, or $684.4 billion, in the second quarter to a level of $22.72 trillion. In the first quarter, current-dollar GDP increased 10.9%, or $560.6 billion. Consumer prices, as measured by the personal consumption price index, increased 6.4% in the second quarter, compared to a first-quarter increase of 3.8%. Excluding food and energy prices, the PCE price index increased 6.1%, compared to an increase of 2.7% in the first quarter. Personal income decreased 22.0% in the second quarter, reflective of a decrease in government social benefits related to pandemic relief programs.
  • Inflationary pressures may indeed prove to be transitory, but prices for consumer goods and services continue to rise. According to the latest Personal Income and Outlays report from the Bureau of Economic Analysis, consumer prices increased 0.5% in June following a similar increase the prior month. Energy prices rose 24.2%, while food prices increased 0.9%. Consumer prices have increased 4.0% since June 2020. Prices, excluding volatile food and energy, rose 0.4% in June and are up 3.5% over the past 12 months. Personal income inched up 0.1% in June after declining 2.2% in May, due in part to a decrease in pandemic-related government benefits. The June increase in personal income is reflective of an increase in employee compensation. Consumer spending rose 1.0% in June.
  • Sales of new, single-family homes dipped 6.6% in June, according to the latest figures from the Census Bureau. The median sales price of new houses sold in June 2021 was $361,800 ($380,700 in May). The average sales price was $428,700 ($434,000 in May). Inventory of new, single-family homes for sale increased to 6.3 months, up from 5.5 months in May. New home sales are 19.4% below the June 2020 estimate.
  • New orders for durable goods increased 0.8% in June, the thirteenth monthly increase out of the last 14 months. Transportation equipment, up for two consecutive months, led the increase, gaining 2.1% in June. Excluding transportation, new orders increased 0.3%. Excluding defense, new orders increased 1.0%. Shipments (+1.0%), unfilled orders (+0.9%), and inventories (+0.9%) advanced in June. New orders for nondefense capital goods, which are used in the production of other goods, increased 3.1% in June. New orders for defense capital goods decreased 1.5% in June.
  • Both imports and exports of goods increased in June, further deepening the international trade in goods deficit. The June trade deficit rose $3.0 billion from May, or 3.5%. Exports climbed $0.5 billion, or 0.3%. Imports increased $3.5 billion, or 1.5%. The trade in goods deficit has risen 28.2% since June 2020. Exports are up 40.6% and imports have advanced 35.5%.
  • For the week ended July 24, there were 400,000 new claims for unemployment insurance, a decrease of 24,000 from the previous week's level, which was revised up by 5,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 17 was 2.4%, unchanged from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended July 17 was 3,269,000, an increase of 7,000 from the prior week's level, which was revised up by 26,000. For comparison, during the same period last year, there were 1,262,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 11.6%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended July 10 were Puerto Rico (5.2%), California (4.4%), Nevada (4.3%), New Jersey (3.8%), Rhode Island (3.8%), Illinois (3.7%), New York (3.5%), Pennsylvania (3.5%), Connecticut (3.4%), and the District of Columbia (3.2%). The states and territories with the largest increases in initial claims for the week ended July 17 were Michigan (+13,547), Texas (+10,730), Kentucky (+8,945), Missouri (+6,056), and Illinois (+3,915), while states and territories with the largest decreases were New York (-10,727), Puerto Rico (-3,904), Tennessee (-3,510), Oklahoma (-3,393), and Georgia (-1,870).

Eye on the Week Ahead

Purchasing managers surveys on the manufacturing and services sectors for July are out this week. But most attention will be paid to the July employment figures, out this Friday. There were 850,000 new jobs added in June. Overall, there were 1.7 million new jobs added over the second quarter of 2021.

 

The Markets (as of market close July 23, 2021)

Last week proved to be a choppy one for stocks. The week began with stocks trending lower on news of a spike in the number of coronavirus cases. However, strong corporate earnings reports helped support the perception that the economy is continuing to advance, despite the cloud of the Delta variant hanging overhead. By last Friday, both the Nasdaq and the S&P 500 reached record highs, with megacap tech stocks helping drive the indexes upward. The Nasdaq gained 2.8% to lead the major benchmark indexes, followed by the Russell 2000, the S&P 500, the Dow, and the Global Dow. Yields on 10-year Treasuries dipped 2.0 basis points lower, while the dollar and crude oil prices each ended the week higher. Gold prices, which had been climbing, took a slight step back, falling about 0.5%.

Stocks slumped last Monday to begin last week as a spike in coronavirus cases, both domestically and abroad, put a damper on the economic recovery. Investors shied away from stocks and moved toward bonds, driving prices higher and yields lower. Each of the market sectors fell, led by financials, industrials, and materials. The S&P 500 dropped the most in two months, the Dow had its largest decline since October, while the small caps of the Russell 2000 continued to sink, falling nearly 10% since peaking in March. The CBOE Volatility Index, which had been relatively steady for several sessions, soared nearly 22.0%. Crude oil prices fell 7.4% to $66.51 per barrel — the first time prices fell below $70.00 per barrel since early June, after major oil-producing countries agreed to boost supply into 2022.

Wall Street closed higher last Tuesday, rebounding from a multi-session losing streak. Several strong corporate earnings reports helped renew investor optimism, at least temporarily, in a reviving economy. Each of the benchmark indexes posted solid gains, led by the Russell 2000 (3.0%), which enjoyed its first positive session since July 12. The Dow and the Nasdaq each gained 1.6%, followed by the S&P 500, which advanced 1.5%, and the Global Dow, which gained 1.0%. Industrials, financials, and real estate headed the sectors, with only consumer staples dipping modestly. The yield on 10-year Treasuries reversed course from last Monday, climbing to 1.20%. The dollar and crude oil prices also advanced by the close of trading.

Stocks advanced for the second straight day last Wednesday. Robust corporate earnings reports helped fuel renewed optimism in the economy, despite increasing coronavirus cases and inflation. The Russell 2000 again led the indexes, climbing 1.7%, followed by the Global Dow (1.5%) and the Nasdaq (0.9%). Both the Dow and the S&P 500 gained 0.8%. Energy shares advanced 3.5%, and financials increased 1.7%. Crude oil prices climbed back above $70.00 per barrel. The dollar dipped, while the yield on 10-year Treasuries jumped 7.1 basis points to 1.28%.

Equities closed last Thursday mostly higher, with only the Russell 2000 losing ground among the benchmark indexes. Technology led the market sectors, with health care, consumer discretionary, and communication services also advancing. Energy and financials both fell more than 1.0%. Treasury yields dipped lower, while the dollar and crude oil prices rose higher.

Another round of robust corporate profits helped push stocks to record highs last Friday. Surging earnings are reflecting an ongoing rise in economic activity, possibly allaying fears that stocks are overvalued. The Nasdaq and the S&P 500 each gained 1.0%, while the Dow (0.7%), the Russell 2000 (0.5%), and the Global Dow (0.4%) also finished the day ahead. Yields on 10-year Treasuries, the dollar, and crude oil prices advanced. Communication services led the sectors, increasing 2.7%.

The national average retail price for regular gasoline was $3.153 per gallon on July 19, $0.020 per gallon higher than the prior week's price and $0.967 more than a year ago. Gasoline production decreased during the week of July 19, averaging 9.1 million barrels per day, down from the prior week's average of 9.9 million barrels per day. U.S. crude oil refinery inputs averaged 16.0 million barrels per day during the week ended July 16; this was 87,000 barrels per day less than the previous week's average. For the week ended July 19, refineries operated at 91.4% of their operable capacity, down from the prior week's level of 91.8%.

Market/Index

2020 Close

Prior Week

As of 7/23

Weekly Change

YTD Change

DJIA

30,606.48
 34,687.85 35,061.55  1.08% 14.56%

Nasdaq

12,888.28

14,427.24 14,836.99 2.84%

15.12%

S&P 500

3,756.07

4,327.16

4,411.79

1.96%

17.46%

Russell 2000

 1,974.86 2163.24

2,209.65

2.15% 11.89%

Global Dow

3,487.52

3,941.75

3,966.19 0.62%

 

13.73%

Fed. Funds target rate

0.00%-0.25%

0.00%-0.25%

0.00%-0.25%

0 bps

0 bps

10-year Treasuries

0.91%

1.30%

1.28%

-2 bps

37 bps

US Dollar-DXY

89.84

92.71

92.88

0.18%

3.38%

Crude Oil-CL=F

$48.52 $71.46 $72.08 0.87% 48.56%

Gold-GC=F

$1,893.10

$1,811.70 $1,802.10 -0.53%

 

-4.81%
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

 

Last Week's Economic News

  • The housing sector continues to slow down from its accelerated pace. Building permits issued, housing starts, and housing completions each fell in June from their respective May totals. Building permits dipped 5.1% in June but are up 23.35% from June 2020. Housing starts slid 1.3% in June but have risen 43.3% over the past 12 months. Housing completions are 6.5% over their June 2020 totals, despite falling 1.4% last month. Building permits for single-family homes fell 6.3% and single-family home completions dropped 6.1% in June. However, single-family housing starts increased 6.3% last month.
  • Sales of existing homes increased 1.4% in June, snapping a streak of four consecutive monthly declines. Overall, existing home sales are up 22.9% over June 2020. Inventory was still relatively scarce in June, however. Unsold inventory sat at a 2.6-month supply at the current sales pace in June, modestly up from May's 2.5-month supply but down from 3.9 months in June 2020. The median existing home price in June was $363,300, up from $350,300 in May and 23.4% over the June 2020 median sales price of $294,400. Sales of existing single-family homes also rose 1.4% in June and are up 19.3% since June 2020. The median existing single-family home price was $370,600 in June, 3.9% higher than the May median price of $356,600.
  • For the week ended July 17, there were 419,000 new claims for unemployment insurance, an increase of 51,000 from the previous week's level, which was revised up by 8,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended July 10 was 2.4%, unchanged from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended July 10 was 3,236,000, a decrease of 29,000 from the prior week's level, which was revised up by 24,000. This is the lowest level for insured unemployment since March 21, 2020, when it was 3,094,000. For comparison, during the same period last year, there were 1,398,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 11.2%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended July 3 were Virgin Islands (4.8%), Puerto Rico (4.7%), Nevada (4.1%), Rhode Island (3.9%), California (3.8%), Illinois (3.7%), New Jersey (3.7%), New York (3.6%), Connecticut (3.5%), the District of Columbia (3.1%), and Pennsylvania (3.1%). The largest increases in initial claims for the week ended July 10 were in Texas (+10,091), New York (+8,190), Pennsylvania (+4,319), Tennessee (+3,061), and Missouri (+1,793), while the largest decreases were in Georgia (-5,286), Rhode Island (-4,807), Puerto Rico (-3,934), Kentucky (-3,771), and Maryland (-2,497).

Eye on the Week Ahead

There's plenty of important market-moving economic information available this week, starting with the latest meeting of the Federal Open Market Committee. The FOMC has maintained the federal funds interest rate and bond purchasing program for several months. However, inflation has been trending higher in conjunction with an improving economy. At some point, the Committee with begin to scale back the quantitative easing measures currently in place, which will likely have a direct impact on the market. Also, the second estimate of gross domestic product for the second quarter is available this week. The initial estimate showed that the economy expanded at an annualized rate of 6.4% in the second quarter.

 

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.

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