Telemus Weekly Market Review May 31st - June 4th, 2021
May 31 – June 4 Week in Review
Markets were calm during the holiday shortened week, with a strong session on Friday leading to gains across all major indices. The S&P 500 finished the week up +0.6%, just shy of a record high. The Dow Jones Industrial Average and NASDAQ Composite were both up comparable amounts, returning +0.7% and +0.5% respectively. The Russell 2000 was the top performer, advancing +0.8%.
It was a fairly uneventful week, aside from volume and price action in so called ‘meme’ stocks. Social media posts have created significant attention in a select group of stocks. AMC Entertainment stood out as one of these names having received significant attention from retail traders. Its shares rose +95% on Wednesday alone, and concluded the week up +83%. The management of AMC took advantage of the rise in the share price, issuing new shares at the elevated levels.
Among S&P 500 sectors, energy was by far the top performer gaining +6.8% on the back of higher oil prices. Real estate, technology and financials were also up a percent or more. Consumer discretionary and health care were the lone sectors with returns in the red.
The release of the May jobs report was, for the second month in a row, weaker than expected. There were 559,000 jobs added in May. The unemployment rate dipped to 5.8% as the labor participation rate was little changed. St. Louis Fed President James Bullard suggested that the labor market may be tighter than unemployment data suggests. Manufacturing data for the month of May showed that activity remains strong, with backlogs at record levels. Supply chain bottlenecks and challenges attracting employees were blamed for the rising backlogs. Service sector demand has returned, with activity at the highest level on record.
The Federal Reserve announced that they would be winding down their $13.7 billion portfolio of corporate bonds. Last year, for the first time ever, the Fed purchased corporate bonds as part of their Quantitative Easing program. Now that the corporate bond market has stabilized, the Fed had decided to liquidate its holdings. Some viewed this as an early indication that they may soon begin slowing the pace of their asset purchases.
Bond returns were positive after yields fell following the weaker than expected jobs report. Some interpreted the data as an indicator that slower job gains could support further patience by the Fed in waiting to tighten its policy. The 2-year Treasury yield finished 1 basis point higher at 0.15%, while the rate on the 10-year declined four basis points to 1.56%.
Oil prices appreciated +4.6% closing at $69.62 a barrel after OPEC forecast that demand could increase by six million barrels a day during the second half of 2021. Inventory levels continue to shrink, providing support for the higher price of crude. Gold finished down slightly falling to $1,890 a troy ounce. Finally, the dollar was flat, closing the week at 90.13.
June 7 – June 11 Economic Calendar
- NFIB Small Business Optimism
- Trade Balance
- JOLTS Job Openings
- MBA Mortgage Applications
- Wholesale Inventories
- Consumer Price Index
- Initial Jobless Claims
- Monthly Treasury Budget
- University of Michigan Consumer Sentiment
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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. 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.