August 24 – August 28 Week in Review
Last week marked the fifth straight weekly gain for the S&P 500 and Nasdaq Composite, which ended the week higher by 3.3% and 3.4%, respectively. Both set new record highs while the Dow Jones Industrial Average turned positive for the year with a 2.6% gain. The small cap Russell 2000 increased 1.7%.
Financial stocks were among the week's biggest winners, benefiting from some curve-steepening activity after Fed Chair Powell outlined a shift towards an average inflation target. Under the new framework, the central bank would allow PCE inflation to run moderately beyond 2.0% over time to make up for years when it ran below 2.0%.
The S&P 500 500 financials sector rose 4.4%, following closely behind the communication services and information technology sectors atop the standings. Only the utilities sector closed lower.
Sprinkled throughout the week last week were positive coronavirus updates: the FDA approved emergency use authorization for convalescent plasma in hospitalized COVID-19 patients, Abbott Labs received emergency use authorization from the FDA for its $5.00, 15-minute COVID-19 antigen test, and Moderna said its COVID-19 vaccine generated a promising immune response in ten elderly patients.
The latest gauge on consumer confidence offered a more pessimistic perspective. The Conference Board's Consumer Confidence Index dropped to 84.8 in August from 91.7 in July for its lowest reading since May 2014.
Microsoft and Walmart rose more than 6.5% last week, helped by reports that the companies are teaming up to possibly acquire TikTok’s U.S. business. Facebook rose 10.0% in what can be best described as purely a momentum trade.
Separately, the Dow will look slightly different starting this week. Salesforce, Amgen, and Honeywell will replace Exxon Mobil, Pfizer, and Raytheon Technologies. In related news Salesforce gained 30% last week, a bulk of those gains coming after its earnings report. Also Apple and Tesla will start trading post-split this week.
In the bond market the 2 year yield was unchanged at 0.15%, while the 10 year yield rose nine basis points to 0.73%.
In other markets the U.S. Dollar Index fell 1.0% to 92.32, WTI crude futures gained 1.6%, or $0.66, to $42.97 a barrel and gold closed at $1,970.50 an ounce.
August 31 – September 4 Economic Calendar