Telemus Weekly Market Review July 12th - July 16th, 2021
July 12 – July 16 Week in Review
Concerns around peak growth along with a rise in COVID-19 cases led a -1.0% decline in the S&P 500. The Dow Jones Industrial was the top performing index, declining by only -0.5%, while the NASDAQ composite retreated by -1.9%. Small Cap stocks were singled out, as the Russell 2000 index was down -5.1%, with investors moving toward more of a risk-off posture.
With second quarter earnings kicking off, investors began to grow concerned that both economic indicators and the growth rate in corporate earnings may be peaking. This created a more defensive stance to the market, as utilities, consumer staples and real estate were the best performing sectors within the S&P 500. Alternatively, energy, consumer discretionary and materials were the laggards.
Throughout the week, there was a notable preference for the largest capitalization stocks. Several of the largest names in the S&P 500, including Alphabet, Microsoft and Apple, delivered positive as investors appeared to seek out high quality, more consistent businesses. Other standouts included Moderna, which was added to the S&P 500, and Pepsi which rallied after posting better than expected earnings and raising its forecast for the year. Stocks with notable price declined included Boeing, which announced it would slow production on its 787 Dreamliner as well as Biogen, which fell on news around reimbursement pressure associated with its newly approved Alzheimer’s therapy.
During the week, Fed Chairman Jerome Powell spoke to both houses of congress as part of his semi-annual testimony. Chair Powell reiterated his stance that the economy has not recovered enough to begin scaling back the pace of bond purchases. This led to a rise in bond prices and a decline in yields, with the 10-year Treasury concluding the week at 1.29%, a 7 basis point decline in yield. The two-year Treasury held steady concluding the week at 0.22%. The risk-off feel of the equity market rubbed off on the bond market as well, as yield spreads in the corporate bond marketed rose slightly.
In other markets the dollar strengthened by +0.6% to 92.71. Crude oil gave up ground as West Texas Intermediate finished at $71.81, down -3.7%. Gold finished little changed at 1,814.50 a troy ounce. Lumber prices stood out last week as the July futures contract fell -23.6%. The precipitous fall to under $550 per thousand board feet, resulted in lumber closing at a level not seen since November of last year. Lumber had peaked at a price of over $1,600 in early May.
July 19 – July 23 Economic Calendar
NAHB Housing Market Index
10:00 AM ET
8:30 AM ET
MBA Mortgage Applications
Chicago Fed National Activity Index
Initial Jobless Claims
Existing Home Sales
- Kansas City Fed Manufacturing Activity
Market US PMI
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.