Market Down and Dirty
Last Week’s Economic/Market Summary
Data
- U.S. equities saw an up and down week that ended with mixed performance on major indices.
- S&P 500 +0.79% Dow -0.45% Russell 2000 -0.35%, Nasdaq +2.26%[1]
- The All-Country World Index was lower by +0.52%.1
- S&P 500 sub-sectors were mixed last week.
- Consumer Discretionary & Tech led to the upside. 1
- Energy & Consumer Staples led to the downside. 1
- The CBOE Volatility Index (VIX) declined 9.25% to end at 15.70. 1
- S&P 500 +0.79% Dow -0.45% Russell 2000 -0.35%, Nasdaq +2.26%[1]
- US Treasury bond yields were mixed last week.
- US 2yr +0.11% at 5.03%, 10yr -0.01% to 4.25%, 30yr -0.08% to 4.30%.1
- The short-end rose on the back of Jerome Powell indicating the Fed could raise rates further.
- Commodities as an aggregate asset class were mixed last week.
- WTI Crude declined -1.53%.1
- Gold was rose -1.31%.1
- The US Dollar index gained +0.78%.1
- In our opinion, U.S. economic data continued to be mixed last week.
- US business activity stagnated in August while manufacturing declined. 1
- The housing market saw mixed data as new home sales rose and mortgage apps sank. 1
- Measures of corporate new investment continue to point to cautious spending. 1
- An index of equities outside the US (FTSE All-World ex-US) rose +0.65%.1
Conclusion
- US Equities had a back and forth week culminating with the S&P 500 snapping a 4-week losing streak.
- The Nasdaq led to the upside on the back of Nvidia’s better than expected earnings.
- Despite this, there were few new weekly closing highs in the Nasdaq constituents.
- The small-cap Russell 2000 continued its underperformance of ’23 and led to the downside.
- While returns this year have been dominated by Mega-cap Tech companies, if a sustainable new bull market were to emerge, small-caps would need to participate.
- This has not been the case as the Russell has been range bound for much of ’23.
- The Nasdaq led to the upside on the back of Nvidia’s better than expected earnings.
- S&P 500 subsectors were mixed last week.
- Consumer Discretionary & Tech led to the upside, driven largely by Nvidia.
- Price action on Nvidia was classic “buy the rumor, sell the news” as it closed lower post-earnings.
- Other price action at the sector level was fairly muted last week outside of Energy which saw it give back some of its recent gains.
- Consumer Discretionary & Tech led to the upside, driven largely by Nvidia.
- US Treasury yields were mixed last week.
- The 2yr rose on the back of Fed Chair Powell’s speech while the 10yr & 30yr declined.1
- The 10yr touched 4.36% during the week for its highest yield since 2007. 1
- Interesting to note that lower credit quality bonds continue to perform as if interest rates aren’t going to impact borrowing for this group of companies.
- This is despite the Fed’s continued emphasis on keeping rates high to battle inflation.
- Non-US equities were positive last week despite a stronger US Dollar.
- Chinese officials launched several initiatives to attempt to boost spending & stock market investment, including reducing taxation on stock gains by 50%.1
- Outside of putting stimulus money in the hands of citizens, we believe these stimulus effects will be muted in the Mainland.
- While investors tend to pay the most attention to equities, the US Dollar has quietly rose 6 weeks in a row. 1
- It is approaching a significant level that in the past has led to increased volatility in other asset markets.
- Chinese officials launched several initiatives to attempt to boost spending & stock market investment, including reducing taxation on stock gains by 50%.1
- The Jackson Hole Economic Symposium came and went with little new intel being revealed.
- Fed Chair Powell made no big highlights or statements during his speech and spent the majority of the time reiterating things he has been communicating for some time.
- Mainly that the Fed will do what it takes to bring inflation down, including raising rates further from current levels.
- “Although inflation has moved down from its peak — a welcome development — it remains too high.” -J. Powell1
- He also reiterated that the Fed’s inflation target will remain 2% despite a lot of chatter from participants & media members that they were considering raising this to 3%.1
- Fed Chair Powell made no big highlights or statements during his speech and spent the majority of the time reiterating things he has been communicating for some time.
Ryan A. Mumy, CFP®,
AIF® – Chief Investment Officer
Contact: 828/855-9400
info@CIASonline.com or rmumy@bloomberg.net
1 Source: Bloomberg – 8/25/2023
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