U.S. Equities Move Upward On The Back Of Improved Inflation Data

Market Down and Dirty

Last Week’s Economic/Market Summary


  • U.S. equities moved higher last week as inflation data came in better than expected.
    • S&P 500 +2.45% Dow +2.30% Russell 2000 +3.70%, Nasdaq +3.32%1
      • The All-Country World Index lost +3.16%.1
    • S&P 500 sub-sectors were all higher last week.
      • Technology, Consumer Discretionary, & Real Estate led with gains over 2.65%.1
      • Energy was the worst performer with a gain of 0.82%.1
    • The CBOE Volatility Index (VIX) declined 10% to end at 13.34. 1
  • US Treasury bond yields sank last week as deflationary pressures seemed to mount.
    • US 2yr -0.20% at 4.74%, 10yr -0.23% to 3.83%, 30yr -0.12% to 3.93%.1
    • Futures are still at a 92% probability of an additional 0.25% hike next week by the Fed. 1
  • Commodities as an aggregate asset class were higher last week.
    • WTI Crude rose +2%.1
    • Gold increased +1.68%.1
    • The US Dollar index declined -2.16%.1
  • In our opinion, U.S. economic data continued to be mixed last week.
    • Both consumer & producer measures of inflation came in below expectations last week. 1
    • US consumer credit expansion slowed dramatically in the latest data. 1
    • Unemployment claims fell while consumer sentiment showed further strength. 1
  • An index of equities outside the US (FTSE All-World ex-US) rose 4.0%.1


  • US Equities rose across the board last week in one of the broadest weekly advances so far in ’23.
    • All major indices were positive last week led by the small-cap tracking Russell 2000.
    • The latest CPI inflation data came in below expectations which seemed to bolster investor confidence in a soft or no landing scenario for the economy.
      • Additionally, other economic data measures came in better than expected.
  • S&P 500 subsectors were all higher last week.
    • The growth-oriented sectors and year to date leaders once again paced equities higher.
    • Interesting to note that Energy continues to lag the overall market.
      • We believe this is in response to the lack of any Chinese stimulus in the face of their growing economic slowdown.
  • GDP in China grew at a slower than expected pace in the 2nd quarter as compared to a year ago when dozens of Chinese cities were still in lockdown. 1
    • The data showed economy-wide prices declining for the 1st time since 2020 while youth unemployment skyrocketed to above 21%.1
    • Despite this, Beijing continues to emphasize that stimulus measures this year will likely be limited in scale.
  • US Treasuries declined across the maturity curve, driven by lower inflation data.
    • The current deeply inverted yield curve continues to price in an upcoming recession.
    • However, if a recession does not occur in the next couple of quarters, we feel there is a growing possibility yields will need to rise further on the long-end relative to the short maturities.
  • Gold continues to hold in despite the recent rise in real interest rates.
    • Note that precious metals often times move inversely to real rates.
  • International equities outperformed to the upside with a gain of 4%.1
    • A big contributor to this gain was the US dollar getting crushed by over 2% on the week. 1
    • The US Dollar is now down to levels not seen in over 15 months but is not yet making new lows. 1
      • A weaker dollar is generally a benefit to any US company doing business abroad, as the products cost less in foreign currencies, thereby boosting potential profits.
  • All eyes will turn from inflation data to the earnings season that got underway last week with several companies surprising to the upside and a few issuing cautious outlooks.
    • The bulk of earnings season is to come over the next 6 weeks.
      • Many investors will be focusing on companies forward outlooks as economic uncertainty lingers.
    • Interesting to note that equity strategists are boosting earnings forecasts for the S&P 500 for the upcoming year faster than they are marking them down. 1
      • We believe this is yet another example of how Wall Street expectations often follow the price of stocks in a reactive manner.

Ryan A. Mumy, CFP®,

AIF® – Chief Investment Officer

Contact: 828/855-9400
info@CIASonline.com or rmumy@bloomberg.net 

 1 Source: Bloomberg – 7/14/2023 

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