Telemus Weekly Market Review August 2nd - August 6th, 2021
August 2 – August 6 Week in Review
A rise in COVID-19 cases stemming from the Delta variant could not deter the market, as the S&P 500 gained +0.9%. Returns among the major indices performed within a tight range with the Dow Jones Industrial Average rising +0.8%, the Russell 2000 up +1.0% and the NASDAQ advancing +1.1%.
The story of the week came in the bond market, where the 10-year Treasury yield dropped as low as 1.13%, intraday, during multiple sessions. Treasury prices, which move opposite bond yields, were not able to hold their gains, as yields bounced back. A strong employment report on Friday sent 10-year yields to 1.30%, finishing the week up 8 basis points from where it began. Rates rose most in belly of the yield curve (5 and 10-year maturities). Yields on 2-year Treasuries were 2 basis points higher concluding the week at 0.21%.
A steeper yield curve led to strong performance out of financial stocks. Financials were up +3.6%, with utilities serving as the second-best sector up over 2%. Consumer staples were the laggard as they were the sole sector with a negative return. Shares of Moderna and Davita both rallied in response to strong earnings reports. Alternatively, Cardinal Health dipped after earnings fell below expectations.
Friday’s employment report provided further support for improving economic conditions. Payrolls climbed by 943,000 jobs leading to a half a percentage point drop in the unemployment rate, which now sits at 5.4%. Strong improvement in hiring within the hospitality sector was a key driver of the improvement in payrolls. Prior to Friday’s report, Fed Governor Christopher Waller said he could back a tapering announcement as early as September if the July and August employment reports showed a progression in lowering unemployment.
July’s ISM reading continued to show a strong pace of industrial activity. The pace of improvement in manufacturing activity slowed, but overall levels remain high. The services sector continues to improve, as the ISM Services Index accelerated from a reading of 60.1 to 64.1, exceeding the record level set in May.
Among real assets, the price of crude oil sank -7.7%, ending at $68.28. The price of gold slumped on Friday in response to higher real yields. Gold finished the week down -2.9% after having traded sideways most of the week. The dollar appreciated +0.7% after the currency bounced back on Friday in response to the strong July unemployment report.
August 9 – August 13 Economic Calendar
- Monday
JOLTS Job Openings
10:00 AM ET
- Tuesday
NFIB Small Business Optimism
6:00AM ET
- Wednesday
MBA Mortgage Applications
7:00AM ET- Consumer Price Index
8:30AM ET
- Thursday
- Produce Price Index
8:30AM ET
Initial Jobless Claims
8:30AM ET
- Friday
- University of Michigan Consumer Sentiment
10:00AM ET
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The S&P 500 index includes 500 leading companies in the US and is widely regarded as the best single gauge of large-cap US equities. The Dow Jones Industrial Average (DJIA) is a widely-watched benchmark index in the U.S. for blue-chip stocks; it is a price-weighted index that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange and the NASDAQ. The Nasdaq Composite Index is a large market-cap-weighted index of more than 2,500 stocks, American depositary receipts (ADRs), and real estate investment trusts (REITs), among others. The Russell 2000 index measures the performance of approximately 2,000 smallest-cap American companies in the Russell 3000 Index. The ISM Services Purchase Manager Index (PMI), otherwise known as the The ISM Non-Manufacturing Index is an economic index based on surveys of more than 400 non-manufacturing (or services) firms' purchasing and supply executives. The ISM services survey is part of the ISM Report On Business—Manufacturing (PMI) and Services (PMI). The services report measures business activity for the overall economy; above 50 indicating growth, while below 50 indicating contraction. The ISM services report contains the economic activity of more than 15 industries, measuring employment, prices, and inventory levels.
An index is not a security in which an investment can be made, as they are unmanaged vehicles that serve as market indicators only and do not account for the deduction of management fees and/or transaction costs generally associated with investable products. It should not be assumed that portfolio holdings will correspond directly to the comparative index benchmark shown above. The holdings and performance of Telemus client accounts may vary widely from those of the presented indices. Advisory services are only offered to clients or prospective clients where Telemus and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Telemus unless a client service agreement is in place. All composite data and corresponding calculations are available upon request.
Matt joined the Telemus team in 2018. As Chief Investment Officer, he leads the firms the investment process and research effort. Matt has experience as an equity analyst and portfolio manager and has advised corporate pension plans on their manager selection. He’s been quoted in Money Magazine and Barron’s.
