Telemus Weekly Market Review June 21st - June 25th, 2021
June 21 – June 25 Week in Review
Markets experienced strong gains, rebounding from the declines of the week prior. The Russell 2000 was the top performer gaining +4.3%, while the Dow Jones Industrial Average lifted 3.4%. The S&P 500 appreciated +2.7%, followed by the NASDAQ, which was up +2.4%.
At the sector level, energy stocks soared +6.7% as the price of crude oil continued to climb to multi-year highs. Financials rallied +5.3% in response to a slightly steeper yield curve along with the Fed giving passing grades to all banks required to submit to its annual stress tests. Defensive sectors were the laggards on the week, as utilities, real estate and consumer staples were all up less than the broader market.
At the company level, Microsoft eclipsed $2 trillion in market capitalization, making it the second company to achieve this milestone behind Apple. Shares of Fannie Mae and Freddie Mac fell in response to a Supreme Court ruling that supported the legality of over $100 billion of profits being paid to the government while the two companies have been in conservatorship. Nike shares rallied over 15% in Friday’s session after reporting quarterly sales that were nearly double the level from a year ago.
On the economic front, jobless claims of 411,000 continued to show a downward trend. Durable goods orders rose + 2.3%, an indication of continued strong demand for big ticket items. Manufacturing activity remains strong as the Markit Manufacturing PMI indicator hit a new record. The Markit Services PMI reading indicated an easing within the services sector. Several Federal Open Market Committee members spoke during the week, offering contradictory signals around policy actions going forward. Three regional Fed Presidents issued comments in support of tapering asset purchases soon. Alternatively, Chairman Powell and Vice Chair Clarida both commented that they did not yet believe conditions were right to consider tapering.
In the bond market, long-term rates experienced modest increases. The 10-year Treasury yield finished at 1.53%, 9 basis points higher, while the 2-year Treasury lifted 1 basis point to a yield of 0.27%. This resulted in steepening of the curve. Rates on high yield bonds continued to fall, leading to price gains. For the week, junk bonds posted a solid gain of +0.3%.
In other markets, the dollar dipped lower by -0.4%. After falling considerably the prior week, gold stabilized and ended up appreciating +0.5% to finish at $1,776.60 a troy ounce. The price of West Texas Crude oil advanced +3.4%. The CBOE Volatility Index, or VIX, which itself has been volatile as of late, fell -24.5%.
June 28 – July 2 Economic Calendar
- Monday
Dallas Fed Manufacturing Activity
10:30AM ET
- Tuesday
S&P CoreLogic Home Price Index
9:00AM ET- Conference Board Consumer Confidence
10:00AM ET
- Wednesday
MBA Mortgage Applications
7:00AM ET- ADP Employment
8:15AM ET - Pending Home Sales
10:00AM ET
- Thursday
Initial Jobless Claims
8:30AM ET- Market US Manufacturing PMI
9:45AM ET - Construction Spending
10:00AM ET - ISM Manufacturing
10:00AM ET
- Friday
Nonfarm Payrolls
8:30AM ET- Trade Balanced
8:30AM ET - Factory Orders
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 Markit Manufacturing PMI (Purchasing Managers' Index) represents data that is collected through a survey of 400 purchasing managers in the manufacturing sector on five different fields, namely, new orders from customers, speed of supplier deliveries, inventories, order backlogs and employment level. Respondents can report either better, same or worse business conditions than previous months. The Markit US Services PMI (Purchasing Managers' Index) is based on data collected from a representative panel of over 400 private sector companies covering transport and communication, financial intermediaries, business and personal services, computing & IT and hotels and restaurants. The index tracks variables such as sales, employment, inventories and prices. For all these fields the percentage of respondents that reported better conditions than the previous months is calculated. The five percentages are multiplied by a weighting factor (the factors adding to 1) and are added. A reading above 50 indicates that the services sector is generally expanding; below 50 indicates that it is generally declining.
The CBOE Volatility Index (VIX) is a real-time index that represents the market's expectations for the relative strength of near-term price changes of the S&P 500 index (SPX). 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.
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.
