Telemus Weekly Market Review May 17th - May 21st, 2021
May 17 – May 21 Week in Review
Markets were little changed on the week with the S&P 500 and Russell 2000 both declining -0.4%. The Dow Jones Industrial Average was down slightly more at -0.5%. Alternatively, the NASDAQ rallied +0.3%.
It was the more defensive and lower volatility sectors that fared best, with real estate, health care, utilities, technology, and staples all posting gains on the week. Alternatively, the more cyclical sectors such as energy, industrials and materials experienced the steepest declines.
There were a few noteworthy news items affecting individual stocks. Discovery Communications announced it will merge with AT&T’s Warner Media division. This will combine networks such as the Discovery Channel and HGTV with CNN and TBS. A number of big box retailers reported their first quarter results. Home Depot announced a stellar 30% growth in its same store sales. Wal-Mart’s U.S. Sales grew by 6%, while Target’s same store sales grew 23%. Target noted a shift in behavior among its customers, as spending has been increasing in categories such as apparel and home décor. Lastly, shares of Ford lifted nearly 13% after the company unveiled an electric version of its F-150 truck.
On the economic front, initial jobless claims fell to 444,000, a new pandemic low. Housing starts show signs of flattening out as a shortage of labor is impacting growth. For Fed watchers, a dovish tone was offered earlier in the week when Vice Chair Richard Clarida commented the April jobs report supported the Fed’s position that the economy is not yet at point where it is appropriate to shift policy. On Wednesday, minutes of the most recent FOMC meeting were released. The commentary did indicate that the Fed may begin to discuss an appropriate time to start slowing its asset purchases during one of its upcoming meetings.
The bond market reacted to the Fed minutes, as long-dated Treasury yields moved abruptly higher shortly after they were released. However, as the week wore on, yields retreated, and the 10-year yield finished a mere basis point lower at 1.62%. The 2-year yield held steady at 0.15%.
In other markets, West Texas Intermediate crude oil lost 2.7%, finishing the week at $63.58 a barrel. This marked oil’s biggest weekly decline since March. The dollar index fell below 90 intraweek before bouncing back following the release of the Fed minutes. It finished the week at 90.02. Gold continued its multi-week rally, gaining over 2% to finish at 1,881.25 a troy ounce. Several industrial commodities experienced a strong pullback. Copper fell by 3.7%, while iron ore lost a more considerable 12.1%. The price of lumber remains volatile. By Tuesday, Lumber prices had fallen over 8%, and even hit a CME circuit breaker forcing a halt to trading. By weeks end, lumber prices had finished 4.5% higher.
May 24 – May 28 Economic Calendar
Chicago Fed National Activity Index
- FHFA House Price Index
- S&P CoreLogic Home Price Index
- Conference Board Consumer Confidence
MBA Mortgage Applications
7:00 AM ET
- Durable Goods Orders
- Pending Home Sales
- Personal Income
- Retail Inventories
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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) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.'s most significant trading partners, including the Euro, Swiss Franc, Japanese Yen, Canadian Dollar, British Pound and Swedish Krona. An index is not a security in which an investment can be made, as they are unmanaged vehicles that serve as market indicators only. It should not be assumed that portfolio holdings will correspond directly to the comparative index benchmark shown above.
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.