Telemus Weekly Market Review June 7th - June 11th, 2021
June 7 – June 11 Week in Review
For the twelfth time in seventeen weeks, stocks and bonds moved in the same direction. Stocks lifted as lower bond yields fueled returns within the health care and technology sectors. The S&P 500 gained +0.4%, hitting a new record high, while the Dow Jones Industrial Average lost ground falling -0.8%. For the fourth straight week, the technology heavy NASDAQ Composite rallied, closing up +1.9%. The top performer was the Russell 2000, which rose +2.2% as small caps returned to favor.
At the stock level, Biogen shares surged +38% on Monday after the company’s Alzheimer’s drug, Aduhelm, was approved by the FDA. Shares of many large cap tech names (including Amazon, Apple, Google and Microsoft) returned to favor appreciating at a faster pace than the broader market. Retail trading in ‘meme stocks’ continued, as shares of Wendy’s and Clover Health caught a bid, experiencing sizable swings in their share prices, despite no new fundamental news. Shares of Campbell Soup Co. slid after the company cut its forecast amid a slowdown in sales as consumers move away from stocking their pantries.
There was plenty of economic data to digest this past week. The notable item was May’s consumer price index (CPI), which rose +0.6% on a month-over-month basis. The one-year inflation rate hit 5.0%. While this number is well ahead of the 2% average the Fed targets, investors and economics seemed to conclude much of the increase was attributable to transitory items such as hikes in the price of rental cars and lodging. Aside from the CPI, the U.S. trade deficit showed an improvement from record levels in prior months. Hiring data showed a greater than expected number of job openings, a conundrum for policy makers that grapple with an unemployment rate that remains elevated at 5.8%.
Volatility continued to tumble, as the CBOE Volatility Index, or VIX, closed at 15.65. Prior to March, the VIX index had not fallen below 20 since the pandemic began. It has continued on a downward trend, closing this week at its lowest level since February of 2020.
Yields on intermediate and long-term bonds declined, resulting in higher prices. The 10-year Treasury finished the week at a rate of 1.45%, levels not seen since early March. The bond market seemed to buy into the notion that inflationary pressures will prove temporary, as yields fell despite the higher than expected inflation reading. The downtrend in rates led to a +0.5% return for the Bloomberg Barclays U.S. Aggregate index, a move that outpaced the broader stock market for the week.
In other markets, the dollar appreciated by +0.4%, closing at 90.51. Crude oil continued its ascent, eclipsing $70 a barrel, to finish the week up +1.8% at $70.91. Lastly, the price of gold softened finishing at $1,877.
June 14 – June 18 Economic Calendar
- Retail Sales
- Empire Manufacturing
Producer Price Index
- Business Inventories
- NAHB Housing Market Index
- MBA Mortgage Applications
- Building Permits
- FOCM Rate Decision
Initial Jobless Claims
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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 Consumer Price Index (CPI) measures the performance of US inflation (not seasonally adjusted) which is the rate of change of consumer goods prices. The data is from Bureau of Labor Statistics. The value of the current month CPI is estimated by the average value of the previous two months CPI. 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). The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. 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 Director of Investments, 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.