Telemus Weekly Market Review May 24th - May 28th, 2021
May 24 – May 28 Week in Review
Markets experienced solid gains as the inflation trade began to lose steam. The S&P 500 rose 1.2%, the Dow Jones Industrial Average was up 0.9%, while the NASDAQ gained 2.1%. Small caps were the best performer on the week with the Russell 2000 increasing 2.4%.
At the sector level, communication services, consumer discretionary and real estate were the best performers. On the other end, utilities, health care consumer staples and energy all finished in the red.
Active trading returned to favorite retail stocks such as AMC Entertainment and GameStop. Volume in these names was heavy and, in some cases, accounted for over 100% of the shares outstanding. Ford continued to climb higher as investors grew more optimistic about the company’s opportunity in electric vehicles. Nvidia shares rose as excitement grew around the company’s growth prospects following a strong quarterly earnings report. Dollar Tree’s earnings results were a rare outlier for the retail sector after the company lowered its expectations citing higher freight costs.
On the economic front, consumer spending for the month of April increased by 0.5% versus March’s stimulus fueled spending levels. The Personal Consumption Expenditure (PCE) index, which is the Fed’s preferred gauge of inflation, was up +0.6% from the prior month. The PCE reading provided further evidence of inflationary pressures. Home prices reflected this, as the S&P CoreLogic Case-Shiller index showed home prices climbing by 13.2% over the past year. This was the highest rate of price increases since December of 2005. Jobless claims continued to decelerate, with the number of initial claims falling to 406,000. Lastly durable goods orders declined by 1.3%.
Bond market returns were fairly modest during the week. Treasury yields round tripped downward pressure that occurred mid-week as yields began to recover following Thursday’s PCE data. The 2-year Treasury yield declined by one basis point to 0.14%. The 10-year Treasury yield fell two basis points to 1.60% by week’s end.
Equity market volatility waned throughout the week. The CBOE Volatility Index, or VIX, dropped nearly 9% on Monday. It continued on a downtrend throughout the week. All told, the VIX declined 16.8%, finishing at a level of 16.69, near its April 16th low. The Treasury bond market’s measure of volatility, the MOVE index, was down -4.7%. It finished the month of May with a -13.8% decline.
In other markets, crude oil lifted 0.8% to close at $66.58. Gold continued its uptrend, closing at $1,903 a troy ounce, a gain of 1.2%. Other commodities were mixed as copper rebounded by 4.3%, with iron ore continuing to slide, down 2.9%. The dollar concluded the week essentially flat to its prior week close at 90.06.
May 31 – June 4 Economic Calendar
Memorial Day – Market Closed
- ISM Manufacturing
- Dallas Fed Manufacturing Activity
- MBA Mortgage Applications
7:00 AM ET
- ADP Employment
- ADP Employment
- Initial Jobless Claims
- Nonfarm Productivity
- ISM Services Index
- Unemployment Rate
- Durable Good Orders
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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 Personal Consumption Expenditure (PCE) price index reflects changes in the prices of goods and services purchased by people living in the United States, or those buying on their behalf, pay for goods and services. It captures inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior. The S&P CoreLogic Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate nationally. 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 Merrill Lynch Option Volatility Estimate (MOVE) Index is a well-recognized measure of U.S. interest rate volatility that tracks the movement in U.S. Treasury yield volatility implied by current prices of one-month over-the-counter options on 2-year, 5-year, 10-year and 30-year Treasuries. 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.