Blog

Labor Department reported an addition of 1.4 million jobs in August

Market Data as of Week Ending 09/04/2020 unless noted otherwise.

EQUITIES
U.S. stocks declined last week after major benchmarks crossed or approached all-time highs. Company size was negligible, while value stocks provided more downside protection and outperformed their growth counterparts. Defensive sectors such as utilities, consumer staples and real estate outperformed whereas the energy, consumer discretionary, information technology, and communication services sectors lagged. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields were mostly unchanged this past week as investors ended the week seeking higher quality investments. Long duration investment grade corporate bonds were the top performing segment followed by long duration government bonds. High yield corporate bonds generally lagged, but managed to outperform relative to other short duration bonds. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Initial unemployment claims declined this week to 881,000, but more importantly, the Labor Department reported an addition of 1.4 million jobs in the month of August. The number of unemployed Americans filing continuing claims dropped to 13.1 million. European leaders such as ECB Chief Economist Philip Lane are concerned about recent Euro currency appreciation which rallied to more than USD 1.20 for the first time since 2018. In Japan, the search for a new candidate to replace retiring Prime Minister Shinzo Abe has intensified, while Berkshire Hathaway made headlines when the company announced that it invested $6 billion in Japanese stocks.

DOWNLOAD SUMMARY

S&P 500 on Track for Best Month Since April

Market Data as of Week Ending 08/28/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced again last week as the S&P 500 Index is on track to record it’s best month since April. Large company stocks generally outperformed their small and medium sized peers and growth stocks outperformed value. Communication services, information technology, financials, and materials outperformed and more than offset weakness in the utilities, health care, real estate, and energy sectors. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields rose this past week as the Federal Reserve announced substantial changes to their interest rate policy. The Fed will no longer raise rates based on surveys of expected inflation and instead will wait until inflation is realized. This change will effectively allow for periods above its 2% inflation goal to offset periods below the target. High yield (below investment grade) corporate bonds were the top performing segment followed by investment grade corporate bonds. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.3%.

MACROECONOMIC DATA
Economic data was largely overshadowed by the Fed’s announcement of changes to their interest rate policy framework. Initial unemployment claims declined from the prior week to just over 1.0 million. The number of unemployed Americans filing continuing claims fell and reached a new low (14.5 million) that has not been observed since early April. Leaders in France, Spain, and Italy appeared to reject the need for nationwide lockdowns to reduce what may be a second wave of coronavirus infections. Meanwhile, German business sentiment strengthened for the fourth consecutive month, signaling a strong rebound in economic activity in the third quarter.

DOWNLOAD SUMMARY

Unemployment Claims Declined This Week and Fell Below 1 Million for the First Time Since the Pandemic Began

Market Data as of Week Ending 08/14/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were generally higher last week as economic trends demonstrate support for a sustained recovery. Analysts have increased S&P 500 earnings estimates for calendar year 2020 following steady declines that reached a bottom in July. There was no clear trend in performance based on company size; however, value stocks outperformed growth, regardless of company size. Value stocks outperformed despite negative returns in the real estate and utilities sectors. More cyclical sectors such as industrials, energy, materials, and consumer discretionary were the top performing sectors. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks lagged developed foreign markets.

BONDS
U.S. Treasury yields rose again this past week. Investment grade corporate bonds lagged despite the yield advantage and favorable economic trends. Treasury bonds were the top performing segment as corporate bonds dealt with higher yields. While near term demand may have declined, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Initial unemployment claims declined this week and fell below 1 million for the first time since the pandemic began in March. Other positive economic data included core inflation which rose 0.6% from the prior month, the biggest jump in almost three decades. On an annual basis, core inflation measured 1.6%, a four-month high, following 1.2% in June. Economic readings in Europe and Asia were mixed but stock prices were supported by a weaker US dollar and improved outlook that stimulus measures may accelerate the economic recovery.

DOWNLOAD SUMMARY

Facebook, Amazon, Apple, and Alphabet Continue to Lead the Market

Market Data as of Week Ending 07/31/2020 unless noted otherwise.

EQUITIES

U.S. stock prices advanced last week and closed out the month of July with gains of more than 5% for the S&P 500. Facebook, Amazon, Apple, and Alphabet (parent company of Google) continue to lead the market after reporting strong financial results despite the pandemic and congressional testimony. Small and medium sized companies generally lagged large companies and growth outperformed, regardless of company size.
Economic sector performance was mixed with declines in energy, materials, and industrials that were offset by gains in information technology, real estate, consumer discretionary, and communication services. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined again this past week. High yield corporate bonds were the best performing asset class, followed by investment grade corporate bonds. Despite the increased demand, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5%.

MACROECONOMIC DATA
Initial unemployment claims rose again from the previous week to 1.4 million and there are approximately 17 million Americans claiming ongoing unemployment benefits. As expected, the U.S. reported a significant decline in second quarter GDP. The $1.8 trillion deficit was attributed mostly due to declines in consumer expenditures and private investment.

DOWNLOAD SUMMARY

Unemployment Claims Rise for the First Time Since March

Market Data as of Week Ending 07/24/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were mixed last week as investor sentiment shifted following employment data and increasing coronavirus cases. Company size was negligible, while value stocks returned to the forefront and outperformed their growth counterparts. Economic sector performance was mixed with declines in healthcare, communication services, and technology that were partially offset by gains in energy, consumer discretionary, and financials. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks outperformed both domestic and developed foreign markets.

BONDS
U.S. Treasury yields declined again this past week. High yield corporate bonds were the best performing asset class, followed by investment grade corporate bonds. Despite the increased demand, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
For the first time since March, initial unemployment claims rose from the previous week (1.31 million to 1.41 million). Meanwhile, the additional unemployment payment under the CARES Act is set to expire at the end of the month, unless Congress and the Administration negotiate either an extension or changes to the program. In Europe, the historic €750 billion stimulus plan gives the EU’s executive branch the ability to raise capital denominated in euros on behalf of all 27 states.

DOWNLOAD SUMMARY

Better than Expected Corporate Earnings and Encouraging Results for Coronavirus Vaccine Candidates

Market Data as of Week Ending 07/17/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced last week as investors responded to a combination of better than expected corporate earnings and encouraging results for coronavirus vaccine candidates. Small and medium sized businesses returned to the forefront and significantly outperformed their larger counterparts for the week. Economic sector performance was mixed with declines in consumer discretionary and technology offset by gains in health care, industrials, materials, and utilities. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks lagged both domestic and developed foreign markets.

BONDS
U.S. Treasury yields narrowly declined this past week (bond prices and yields move in opposite directions). High yield corporate bonds were the best performing asset class, followed by investment grade corporate bonds. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 6%.

MACROECONOMIC DATA
Economic data was mixed as manufacturing and retail sales were better than expected, while consumer sentiment retreated from the prior month. Additional stimulus measures remain outstanding but conversations have been intensifying in Europe to work through a proposed 750 billion EU recovery fund. Separately, France is expected to add another EUR 100 billion to support a recovery, bringing the cumulative total to more than 500 billion pledged by the government.

DOWNLOAD SUMMARY

Economic Data Overshadowed by a Resurgence in Coronavirus

Market Data as of Week Ending 07/10/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were mixed for the week as large companies advanced while smaller sized companies underperformed. Economic sector performance was also mixed with declines in energy, industrials, and real estate offset by gains in the consumer, financials, technology, and communication sectors. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed both domestic and developed foreign markets.

BONDS
U.S. Treasury yields declined this past week. Most notably, long term yields returned to lows last seen in April. Long term government bonds were the best performing segment followed by investment grade corporate bonds. Within short and intermediate bonds, high yield corporate bonds outperformed as investors seek yield. Investment grade corporate bonds are yielding approximately 2.1% and high yield corporate bonds are yielding more than 6%.

MACROECONOMIC DATA
Most of the economic data was overshadowed by a resurgence in coronavirus cases across several U.S. states. By the end of the week, the U.S. reported more than 60,000 daily new cases and over 3 million confirmed cases since the start of the pandemic. Analysts have forecasted that S&P 500 revenue will drop 10% and earnings will decline more than 40% for the second quarter. Despite a trend of higher cases in Tokyo, Japan has relaxed its coronavirus-related restrictions allowing up to 5,000 people at large events.

DOWNLOAD SUMMARY

S&P 500 Records Highest Quarterly Gain Since 1998

Market Data as of Week Ending 07/3/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced as the S&P 500 index recorded its highest quarterly gain (+20.5%) since 1998. Small and medium sized companies generally lagged large companies and growth outperformed, regardless of company size. All major economic sectors ended the week in positive territory, led by gains in real estate, materials, and consumer discretionary stocks. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields were mixed for the week as short term bond yields narrowly declined while intermediate and long term yields nudged higher. Investment grade corporate bonds outperformed both government bonds and high yield corporate bonds, as investors balance credit quality and interest rate risks. Investment grade corporate bonds are yielding approximately 2.2% and high yield corporate bonds are yielding more than 6%.

MACROECONOMIC DATA
The June employment report was better than expected, as the unemployment rate declined to 11%, after reaching a peak of nearly 15% in April. Other positive economic reports included rising consumer confidence, a surge in pending home sales, and improving survey data from the manufacturing sector. Global manufacturing data in Europe and China continued to show significant improvement, which are positive signs for a sustained economic recovery.

DOWNLOAD SUMMARY

Unemployment Benefits Claims Dropped for the First Time Since Late April

Market Data as of Week Ending 06/26/2020 unless noted otherwise.

EQUITIES
U.S. stock prices declined as new coronavirus cases accelerated across certain regions of the country. Small and medium sized businesses delivered mixed results; however, a clear preference for growth stocks was evident, regardless of company size. Higher growth sectors, such as technology, outperformed while more cyclical sectors, such as energy and financials, declined for the week. Developed foreign stocks in Europe and Asia outperformed U.S stocks for the fourth consecutive week while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined for the week as investor sentiment pivoted and demand for higher quality bonds increased. Government bonds outperformed while high yield corporate bonds lagged. Investment grade corporate bonds are yielding approximately 2.2% and high yield corporate bonds are yielding more than 6%.

MACROECONOMIC DATA
Initial jobless claims rose by another 1.5 million last week, but Americans claiming ongoing unemployment benefits claims dropped below 20 million for the first time since late April. The IMF downgraded 2020 global growth to a nearly 5% decline, which if realized, would be the largest contraction since 1946.

DOWNLOAD SUMMARY

Even as jobless claims rise by 1.5 million, investor sentiment remains positive

Market Data as of Week Ending 06/19/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced as investor sentiment and favorable economic reports supported risk assets. Small and medium sized businesses delivered mixed performance; however, a clear preference for growth stocks was evident, regardless of company size. Higher growth sectors such as technology outperformed while more defensive sectors such as real estate and utilities declined for the week. Developed foreign stocks in Europe and Asia outperformed U.S stocks for the third consecutive week while Emerging Market stocks lagged developed foreign markets.

BONDS
U.S. Treasury yields were mostly flat for the week as Fed Chair Jerome Powell testified before Congress and made the case for additional fiscal stimulus to support economic growth. Corporate bonds outperformed after the Federal Reserve announced that it will begin buying a broad portfolio of U.S. corporate bonds. Investment grade corporate bonds are yielding approximately 2.2% and high yield corporate bonds are yielding more than 6%.

MACROECONOMIC DATA
Initial jobless claims rose by another 1.5 million last week and there are nearly 20.5 million Americans claiming ongoing unemployment benefits. The Bank of England increased its bond-buying program by GBP 100 billion while Japan reported that the country’s exports declined 28% year over year.

DOWNLOAD SUMMARY