Weekly Updates

Weekly Update: August 17, 2021-Passage of Infrastructure Boosts Stocks, Plus SFG News and Events

August 17, 2021


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Passage of Infrastructure Boosts Stocks


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Healthy Living


Weekly Riddle


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Passage of Infrastructure Boosts Stocks

Looking past inflation figures and Delta variant trends, stocks last week found a way to climb higher and set fresh record highs in the process.
The Dow Jones Industrial Average rose 0.87%, while the Standard & Poor’s 500 advanced 0.71%. The Nasdaq Composite index was flat (-0.09%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.77%.

Quietly Climbing

Stocks moved higher amid relatively light trading last week. After initially retreating under the weight of Delta variant updates, stocks grinded higher, catalyzed by the Senate’s passage of a $1 trillion infrastructure bill.

Two themes emerged last week. The first was that inflation assumed a less threatening profile. The most recent Consumer Price Index report showed some moderation in consumer price increases, while investors appeared to interpret a hotter-than-expected Producer Price Index report as the peak in this inflation cycle.

Also worth noting were comments by multiple Federal Reserve Bank regional presidents suggesting that the time for tapering (i.e., ending the Fed’s bond purchases) was nearing, with one intimating that tapering could start as early as October.

Inflation Reports

Consumer prices climbed at their fastest rate since August 2008, rising 5.4% year-over-year. But this elevated rate was expected by most economists. The core inflation rate (excludes the more volatile food and energy prices) came in 4.3% higher, substantially lower than anticipated. This deceleration in core inflation was largely attributed to a slowdown in price increases in used cars and apparel.

More unsettling was the following day’s Producer Price …

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Weekly Update: August 10, 2021-Jobs Strong, Earnings Strong, Plus SFG News and Events

August 10, 2021


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Jobs Strong, Earnings Strong


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Jobs Strong, Earnings Strong

Overcoming jitters about the Delta variant and the reintroduction of mask requirements, stocks climbed higher on strong employment data and a fresh batch of strong corporate earnings.
The Dow Jones Industrial Average rose 0.78% while the Standard & Poor’s 500 advanced 0.94%. The Nasdaq Composite index gained 1.11% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, picked up 1.61%.

Push and Pull
The crosscurrents of strong corporate profits and the rise in Delta variant infections led to a roller coaster week of price action, as markets alternated between daily gains and losses. By Thursday, however, investors appeared to grow more optimistic that the economic reopening was not under serious threat when back-to-back employment reports suggested that the economic recovery remained on track.
A favorable initial jobless claims report was enough to send the S&P 500 and Nasdaq to new all-time highs. Thanks to Friday’s stronger-than-expected employment report, the S&P 500 managed to add to its previous record close, while the Dow Jones Industrial Average set its own record high. The more tech-centric Nasdaq, however, slipped off its highs.
Employment Brightens
Last week reinforced the idea of an improving labor market. After a disappointing ADP (Automated Data Processing) National Employment Report that showed a slowdown in private-sector hiring, with just 330,000 new jobs added, subsequent employment data were much more encouraging.
Thursday’s report of a modest drop in initial jobless claims to 385,000 and a more substantial drop of 366,000 in continuing claims was followed by a solid employment report on Friday, which showed …

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Weekly Update: August 3, 2021-Market Shows Small Loss, Plus SFG News and Events

August 3, 2021

weekly-update-august-3-2021-market-shows-small-loss-plus-sfg-news-and-events


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Market Shows Small Loss


Food for Thought


Tax Tips


Healthy Living


Weekly Riddle


Photo of the week


Market Shows Small Loss

The stock market posted small losses last week despite a very strong showing by corporate America.
The Dow Jones Industrial Average slipped 0.36%, while the Standard & Poor’s 500 lost 0.37%. The Nasdaq Composite index dropped 1.11% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, jumped 1.51%.

Stocks Take a Breather
There were plenty of excuses for stocks to retreat last week. News of a new phase in Chinese regulators’ crackdown on large, private-sector companies, a decline in new home sales, and concerns about the Delta variant weighed on investors.
After opening the week adding to record highs, stocks turned lower despite an earnings season that continued to impress.
Solid earnings from the mega-cap technology companies were not enough to propel stocks higher. Instead, stocks slipped throughout the week, fighting uncertainty over Chinese stocks, a disappointing second-quarter Gross Domestic Product number, and a retreat in technology shares they reset to fresh company guidance.
Chinese Crackdown
Chinese technology stocks were under pressure last week as Chinese regulators continued their push to rein in large companies for reasons that include data security, abusive corporate behavior, financial stability, and curtailing private-sector power.
Chinese government actions raised new levels of concerns about which industries may next fall in the crosshairs of regulators. American investors have plenty of exposure to Chinese companies. Substantial losses were felt by mutual funds and hedge funds, which account for about …

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

July 27, 2021


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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 …

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

July 20, 2021


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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 …

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

July 12, 2021


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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 …

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

July 6, 2021


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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…

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

June 28, 2021


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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…

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

June 22, 2021


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Fed Signals Interest Rate Hikes


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Tax Tips


Healthy Living


Weekly Riddle


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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…

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

June 15, 2021


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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 …

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