Market Data as of Week Ending: 7/23/2021 unless noted otherwise
U.S. stock prices advanced for the week as global growth accelerates, despite concerns of the delta variant of coronavirus. Analyst expectations for S&P 500 earnings growth increased to more than 74% as companies have been reporting better than expected earnings for the second quarter. Large cap companies narrowly lagged their small and mid-cap peers while growth stocks maintained their leadership position relative to value stocks. Communication services, consumer discretionary, and information technology were the best performing sectors. Defensive and cyclical sectors such as utilities, real estate, and energy lagged and were the only sectors in negative territory for the week. Developed foreign stocks in Europe and Asia lagged U.S. stocks while Emerging Market stocks underperformed both developed foreign and U.S. markets.
U.S. Treasury yields narrowly declined as the 10-Year note recovered to end the week at 1.28%, following a sharp decline earlier in the week. Long-term investment grade corporate bonds were the best performing segment while all short-term high yield corporate bonds were the only segment in negative territory. Investment grade corporate bonds ended the week with yields near the same level at approximately 2.0% and high yield corporate bonds are slightly higher than 4.0%.
Economic data continues to point toward stronger growth but the data points toward a slower pace of growth. The IHS Markit Flash U.S. Composite PMI Output Index recorded a 59.7 in July, down from 63.7 in June, but remains near the top of the survey’s 14-year history. The manufacturing sector advanced to a series high of 63.1 while the services sector declined to 59.8. Supply and labor constraints continue to be headwinds as demand exceeds supply in many industries. Housing data was also strong as the median U.S. home priced rose 1.4% to a record high in June. Europe is expected to have growth accelerate in the second half of the year as the IHS Markit Flash Eurozone Composite PMI rose to 60.6 in July, its highest since July 2000. Export data from Japan was also strong as the country reported that year-over-year exports rose by more than 48% in June.