Market Data as of Week Ending: 09/02/2022 unless noted otherwise
U.S. stock prices declined for the third consecutive week as investors price in the impact of higher interest rates that may linger, especially if the economy remains stable. Value stocks held up better than their growth counterparts while smaller companies generally lagged their large and mid-sized peers. All major economic sectors in the S&P 500 declined with the most significant losses in the information technology and materials sectors. Traditionally defensive sectors such as consumer staples, utilities, and health care provided some downside protection and outperformed. Developed foreign and emerging stock prices also declined but delivered mixed results relative to the U.S. for the week.
U.S. Treasury yields advanced again for the week with more significant increases in longer duration bonds. The 10-year U.S. Treasury increased by 0.15%, ending the week at nearly 3.20% and the 30-year increased to 3.35%, up from 3.21%. Higher-quality government bonds generally outperformed while high yield corporate bonds lagged. However, since long duration yields were up more than 0.10%, long duration government and investment grade corporate bonds were down more than 2.5%. Yields on investment grade and high yield corporate bonds increased, finishing the week at 4.9% and 8.5%, respectively.
Economic releases were sparse for the week, but the employment situation report on Friday showed that the economy continues to have strong support for labor demand. Employers added 315,000 jobs in August, down from more than 500,000 in July, but well above levels that might signal a recession is imminent. The unemployment rate rose to 3.7% in August as more workers entered the labor force. Job openings also increased to more than 11.2 million with nearly two jobs available for each unemployed person. Manufacturing data remains mixed as survey results from ISM and S&P are still indicating that current conditions are in expansion territory. However, the threats of inflation, supply constraints, and rising interest rates are constraining growth.