Telemus Weekly Market Review July 19th - July 23rd, 2021
July 19 – July 23 Week in Review
The market was a bit of Dr. Jekyll and Mr. Hyde this past week. On Monday the Dow Jones Industrial Average fell -2.1%, its largest single day decline of 2021. The decline was primary fueled by fears associated with the COVID-19 Delta variant. Investors bought the dip, resulting in stocks rising the rest of the week. When it was all said and done, the S&P 500 climbed +2.0%, the Dow +1.1%, while the NASDAQ Composite was the top performer adding +2.8%. Small cap stocks, as measured by the Russell 2000, appreciated +2.2%.
Monday’s decline resulted in the S&P 500 hitting its 50-day moving average, a key technical level. The market used this as a resistance point, with volumes out of traditional retail brokerage platforms increasing following Monday’s retrenchment. Overall market volumes, however, hit a summer lull as Thursday had the second lowest number of shares traded this year.
The pace of second quarter earnings reports began to pick up. Positive surprises came from Chipotle Mexican Grill, whose sales were ahead of expectations. American Express also rallied after it added a record number of new customers. Netflix shares, however, declined -2.8% during the week after their subscriber forecast for the coming quarter came up short of expectations. Southwest and American Airlines slipped after sounding a more cautious tone around business travel demand.
Economic readings released this week were generally positive. New home construction grew 6.3% and have climbed 29.1% versus a year ago. The gain in new home construction was a positive surprise despite raw material shortages. According to the National Association of Realtors, home prices are up 24% over the past year with the median home price nationally now at $363,000. This week’s jobless claims reading was higher than expected at 419,000, up from 350,000 the prior week.
Similar to stocks, bonds seesawed as well. On Monday, Treasury prices gained as yield fell below 1.2%. By weeks end, the 10-year Treasury had risen back to 1.28%, finishing just a basis point lower from where it began the week. Credit spreads, or the difference in yields between corporate bonds and Treasuries, widened on Monday by the largest amount in two months. By Friday, spreads on investment grade bonds were back to where they started.
Real asset markets had similar characteristics to those of stocks and bonds. The price of oil plummeted -7.5% on Monday, its biggest decline since September. Oil prices were impacted by OPEC+, which agreed to a supply hike. Oil prices rebounded as the week went on finishing at $72.07, up +0.4%. Natural gas prices continue to climb, hitting a 31-month high. Natural gas prices were up 10.5% for the week and are up 59.6% year-to-date. The dollar gyrated serving as a safe haven asset on Monday and softening slightly the remainder of the week. All told, the dollar appreciated by +0.2%. Gold sold off by -0.7%, ending at $1,801 a troy ounce.
July 26 – July 30 Economic Calendar
New Home Sales
10:00 AM ET
- Dallas Fed Manufacturing Activity
Durable Goods Orders
- FHFA House Price Index
- S&P Core Logic Home Price Index
- Conference Board Consumer Confidence
MBA Mortgage Applications
- Retail Inventories
- FOMC Rate Decision
Initial Jobless Claims
- Personal Consumption
- Pending Home Sales
- University of Michigan Sentiment
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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.