Weekly Updates

Weekly Update: July 27, 2021-Markets Overcome Delta Variant Reports, Plus SFG News and Events

July 27, 2021


Table of Contents



Markets Overcome Delta Variant Reports


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Markets Overcome Delta Variant Reports

Overcoming a COVID-related economic growth scare, stocks moved higher amid a week of strong corporate earnings reports.
The Dow Jones Industrial Average rose 1.08%, while the Standard & Poor’s 500 gained 1.96%. The Nasdaq Composite index soared 2.84% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 0.20%.

Delta Variant Head Fake
Stocks staged a broad retreat on Monday as traders worried about the adverse economic implications of growing Delta variant infections. Economically sensitive sectors, such as energy, financials, industrials, and materials, absorbed the brunt of Monday’s sell-off.

But the markets did a quick about face, posting four-consecutive days of gains and leaving the three major averages with fresh record highs.

The sharp reversal may be attributable to a “buy on the dip” investor mentality, the absence of investment alternatives to stocks in this low interest rate environment, and massive financial liquidity. Stocks were also lifted by a healthy kick-off to the second quarter earnings season.
Strong Start

The earnings season moved into full swing last week, and the results exceeded the market’s high expectations.
Of the 120 companies in the S&P 500 index that have reported as of Friday, July 23, 89% of them beat the Street’s earnings-per-share estimates by, on average, 20.6%. Financials and Consumer Discretionary sectors provided the biggest earnings surprises (+28.9% and +24.5%, respectively), while Materials and Utilities delivered the smallest positive surprises (+5.3% and +2.5%, respectively).
These earnings beats are leading Wall Street analysts to …

CONTINUE READING

Weekly Update: July 20, 2021-Stocks Retreat, Inflation Advances, Plus SFG News and Events

July 20, 2021


Table of Contents



Stocks Retreat, Inflation Advances


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Stocks Retreat, Inflation Advances

Despite a good start to earnings season and some solid economic data, worries of slower second-half economic growth led to a pullback in stock prices last week.
The Dow Jones Industrial Average fell 0.52%, while the Standard & Poor’s 500 lost 0.97%. The Nasdaq Composite index sank 1.87% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, was flat (-0.06%).

Stocks Retreat
Stocks weakened amid an active week of news, including two important inflation reports, Congressional testimony from Fed Chair Jerome Powell, a string of economic reports, and the start of the second-quarter earnings season.

The earnings season began on a strong note as 95% of the first S&P 500 constituent companies to report checked in with “earnings above estimates” by an average of 22%. Despite these above-expectation earnings, stocks moved little on the results.

Bond yields continued to trend lower amid Powell’s testimony that monetary policy would remain unchanged. A decline in consumer sentiment fed worries of economic slowdown, leading stock lower and cementing losses for the week.
Hot Inflation
The Consumer Price Index (CPI) jumped 5.4% in June, representing the biggest monthly gain since August 2008. The core CPI, which excludes food and energy, increased 4.5%, which was the fastest pace since September 1991.

The CPI report was followed by the Producer Price Index, which surged 7.3% from a year earlier, outpacing May’s jump of 6.6%. Higher wholesale prices were primarily attributed to …

CONTINUE READING

Weekly Update: July 12, 2021-Stocks Edge Higher in Short Week, Plus SFG News and Events

July 12, 2021


Table of Contents



Stocks Edge Higher in Short Week


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Stocks Edge Higher in Short Week

Stocks managed small gains as investors wrestled with concerns over economic growth prospects and a rise in COVID-19 infections.
The Dow Jones Industrial Average picked up 0.24%, while the Standard & Poor’s 500 gained 0.40%. The Nasdaq Composite index added 0.43%. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.78%.

A Choppy Week
In a truncated week of trading, stock market action was turbulent and indecisive. A mixed start saw cyclical stocks sell off amid concerns of slowing economic growth, while growth stocks advanced in response to falling yields.
After strengthening mid-week with the release of the FOMC meeting minutes, stocks skidded when reopening fears resurfaced Thursday on a new wave of global COVID-19 infections and Japan’s emergency declaration that reintroduced lockdown protocols. This led to a broad-based sell-off, with financials, home builders, and technology hit hard. A drop in bond yields added to the deteriorating sentiment.
Bond yields rebounded on Friday, setting the stage for a strong comeback for stocks, with the three major indices closing at new all-time highs.
Attention Turns to Bonds
Since reaching a 2021 high of 1.74% in March, the 10-year Treasury yield has been in a slow, steady decline, closing at 1.37% on Friday.5
One explanation may be that reopening sentiment has turned more cautious as the Delta variant of COVID-19 spreads globally. Another view is that overseas investors are …

CONTINUE READING

Weekly Update: July 6, 2021-Strong Employment Reports, Plus SFG News and Events

July 6, 2021


Table of Contents



Strong Employment Reports


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Strong Employment Reports

Strong employment reports and rising consumer confidence sent the stock market broadly higher last week.
The Dow Jones Industrial Average rose 1.02%, while the Standard & Poor’s 500 picked up 1.67%. The Nasdaq Composite index gained 1.94%. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.42%.

Stocks Rally
Rising conviction in the economic recovery and waning inflation worries drove stock prices higher, with the S&P 500 and Nasdaq Composite racing to record closes to begin the week.
Amid the week-long march higher, market leadership changed hands throughout the five-trading days. The leadership baton alternated between the technology and high-growth companies, which responded to lower bond yields, and cyclical stocks, which rallied on higher oil prices and successful bank stress tests.
Economic news buoyed investor sentiment as consumer confidence rose and an improving labor market—weekly initial jobless claims came in at a pandemic-era low (364,000), while employers added 850,000 new jobs in June—sent the S&P 500 and Nasdaq Composite to new record highs to close out the week.
A Confident Consumer
Market sentiment was lifted by a rise in The Conference Board’s Consumer Confidence Index, which reached its highest level since the onset of the pandemic in March 2020. This was the fourth-straight month of increases in…

CONTINUE READING

Weekly Update: June 29, 2021-Stocks Reach All-Time Highs, Plus SFG News and Events

June 28, 2021


Table of Contents



Stocks Reach All-Time Highs


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Stocks Reach All-Time Highs

Stocks reached new all-time highs last week as markets staged a strong rebound from the previous week’s declines.
The Dow Jones Industrial Average rose 3.44%, while the Standard & Poor’s 500 picked up 2.74%. The Nasdaq Composite index increased 2.35%. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.97%.

Stocks Climb
Stocks rallied on the first day of trading last week and gained further momentum on Thursday and Friday. Despite some discouraging data on housing and initial jobless claims, stocks managed to set new highs, as investors cheered an agreement between President Biden and a group of senators that appeared to pave the way for the passage of a $1 trillion infrastructure bill.
Positive results from the Federal Reserve’s stress tests of banks, which raised the prospect of banks raising their dividend payouts and share buybacks, and a key inflation measure coming in at market expectations provided impetus for further gains. The S&P 500 had its best week since February and ended the five-trading days at a record high.
Housing Headwinds
Historically low mortgage rates, the COVID-19 pandemic, and a flush consumer have contributed to a very strong housing market in recent months. Last week’s housing data for May, however, showed that housing may be running into…

CONTINUE READING

Weekly Update: June 22, 2021-Fed Signals Interest Rate Hikes, Plus SFG News and Events

June 22, 2021


Table of Contents



Fed Signals Interest Rate Hikes


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Fed Signals Interest Rate Hikes

New messaging from the Federal Reserve on interest rates and inflation last week led to a broad retreat in stock prices.
The Dow Jones Industrial Average dropped 3.45% while the Standard & Poor’s 500 lost 1.91%. The Nasdaq Composite index slipped 0.28% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.64%.

Unsettled Markets
The Federal Reserve’s announcement on Wednesday that interest rate hikes may likely occur sooner than expected and that it had underestimated the pace of inflation unsettled investors. The hardest hit groups were cyclical stocks, like energy, materials, and industrials, as well as financials and consumer staples. Losses accelerated into the week’s close on comments by St. Louis Fed President James Bullard that the first rate hike could be as soon as 2022.
The bond yield curve flattened, as short-term interest rates rose in anticipation of rising rates and longer-term rates declined, reflecting a view of an eventual economic slowdown.

The Fed’s Surprise
Last week’s FOMC meeting announcement took investors by surprise as the Fed indicated that two rate hikes in 2023 were likely. It was as recent as March that the Fed had signaled that rates would remain unchanged until 2024. The Fed also raised its inflation expectations to 3.4%, up from its March projection of 2.4%, though it continues to believe that…

CONTINUE READING

Weekly Update: June 15, 2021-Stocks Stay Cool, Inflation Heats Up, Plus SFG News and Events

June 15, 2021


Table of Contents



Stocks Stay Cool, Inflation Heats Up


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Stocks Stay Cool, Inflation Heats Up

Stocks ended the week mixed as investors appeared to shrug off a hotter-than-expected inflation report.
The Dow Jones Industrial Average slipped 0.80%, while the Standard & Poor’s 500 advanced 0.41%. The Nasdaq Composite index led, tacking on 1.85%. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.31%.

Another Quiet Week
The market traded in a narrow range for much of last week as investors anxiously awaited the release of the Consumer Price Index (CPI) on Thursday.
May’s CPI saw an increase in inflation that exceeded most expectations. Paradoxically, markets advanced on the news, sending the S&P 500 to a new record close and the technology-heavy NASDAQ Composite higher. Perhaps equally unexpected was the decline in the 10-year Treasury yield, which slipped to 1.45%, touching its lowest level in three months.
On Friday, stocks were unable to materially build on the previous day’s advance, though the S&P 500 managed to add onto its record Thursday close.
Inflation Trends
Consumer prices headed higher in May, rising 0.6% from April and by 5.0% from a year ago. It was the largest jump in the CPI since August 2008. Core inflation, which excludes food and energy prices, rose 3.8% — the sharpest increase in nearly three decades.
Automobile prices were one of the primary contributors to May’s number. Used car and truck prices jumped 7.3% month-over-month and by 29.7% from a year ago. New cars experienced their …

CONTINUE READING

Weekly Update: June 1, 2021-Upbeat Feelings Boost Market, Plus SFG News and Events

June 1, 2021


Table of Contents



Upbeat Feelings Boost Market


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Upbeat Feelings Boost Market

Optimism over the economic reopening and renewed enthusiasm for technology and other high-growth companies powered the stock market higher last week.
The Dow Jones Industrial Average rose 0.94%, while the Standard & Poor’s 500 climbed 1.16%. The Nasdaq Composite index led, picking up 2.06%. The MSCI EAFE index, which tracks developed overseas stock markets, added 0.46%

Solid Gains
Stocks rallied on renewed confidence in the economic recovery, lower inflation worries, and rising comfort with Fed officials talking about the potential for easing of its monthly bond purchases. Technology, communication services, and reopening stocks were among the market leaders.
Investor sentiment was buoyed late in the week by an encouraging jobless claims number and the unveiling of a Republican infrastructure proposal. A somewhat hotter-than-expected inflation indicator on Friday did nothing to dampen optimism as stocks added to their gains ahead of the three-day Memorial Day weekend.
Jobless Claims Reach Pandemic Lows
In a sign of further recovery in the labor market, the number of initial jobless claims fell to a pandemic low, continuing the downward trend in worker layoffs. New jobless claims totaled 406,000 for the week, well below the pandemic high of nearly 1.5 million, though still above the …

CONTINUE READING

Weekly Update: May 25, 2021-Inflation Concerns Continue, Plus SFG News and Events

May 25, 2021


Table of Contents



Inflation Concerns Continue


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Inflation Concerns Continue

Stock prices fluctuated amid inflation concerns and bargain hunting, leaving stocks mixed for the week.
The Dow Jones Industrial Average slipped 0.51%, while the Standard & Poor’s 500 dropped 0.43%. The tech-heavy Nasdaq Composite index advanced 0.31%. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.67%.

Lots of Motion, Little Movement

Stocks began last week extending their losses from the previous week, as the slide in technology and other high-growth stocks resumed. Inflation worries also weighed on the market.

After steep declines in early Wednesday trading, market sentiment took a more positive turn, allowing stocks to pare their losses as the session came to a close, despite news that the Fed could be contemplating tapering its monthly bond purchases.

This positive momentum continued into Thursday, aided by a declining initial jobless claims number and a strong rebound in technology. The rebound lost steam into Friday’s close, leaving stocks little changed for the week.

The Fed Hints at a Turn

The Federal Open Market Committee (FOMC) on Wednesday released the minutes of its April meeting. The report suggested that a number of committee participants had raised the idea that—if the economy continues to make progress—it might be appropriate to…

CONTINUE READING

Weekly Update: May 18, 2021-Stocks React to Big CPI Shift, Plus SFG News and Events

May 18, 2021


Table of Contents



Stocks React to Big CPI Shift


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Stocks React to Big CPI Shift

A surge in consumer inflation unsettled investors, leading to a turbulent week of trading on Wall Street.
The Dow Jones Industrial Average slipped 1.14%, while the Standard & Poor’s 500 fell 1.39%. The Nasdaq Composite index dropped 2.34% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 3.02%.

Inflation Concerns
The market has been troubled recently by building inflationary pressures. Investors are concerned that rising prices may hurt corporate profits and force the Fed to tighten its monetary policy sooner than anticipated. Worse, investors fear the Fed may have to react more aggressively if it waits too long to act.
After back-to-back losses, the retreat in stock prices culminated on Wednesday, following the release of the higher-than-anticipated Consumer Price Index (CPI) report.
Stocks managed to claw back some of the week’s losses with a Thursday-Friday rebound, sparked by investors doing some bargain hunting.
Consumer Prices Spike
Wednesday’s release of April’s CPI inflamed investors’ inflation fears, as consumer prices rose 0.8% in April and jumped by 4.2% year-over-year. These numbers were above expectations.
April price increases were led by a remarkable 10% increase in used cars, with additional pockets of sharp increases, notably in transportation services and commodities. Perhaps equally concerning is that energy costs showed a decline during April, a price weakness that may…

CONTINUE READING