|All data is for the week ended June 18, 2021 Stocks |
Major US stock indices were down last week with the S&P 500 down 1.87%, the Russell 2000 losing 4.17% and the NASDAQ retreating 0.26%. Overseas indices also declined with the international developed markets (MSCI EAFE) and emerging markets (MSCI EM) dropping 2.40% and 1.44%, respectively. Technology was the sole sector to rise in the US while the cyclical sectors were the major decliners.1
Fixed Income The Federal Reserve projected mid-week that interest rates would rise from record low levels a year earlier than their prior forecast because the economy and employment are growing faster than their expectations. This represents the Fed’s best estimate, not their goal.2 The yield on 2 year treasuries rose 10 basis points, the yield on 10 year treasuries declined 2 basis points and 20 year interest rates dropped 11 basis points—creating a flatter yield curve.3
Commodities The price of gold fell last week following the Fed’s announcements as the US dollar gained strength against foreign currencies (since gold is priced in dollars and became more expensive to foreign investors). It closed at $1,7776 per troy ounce, down 5.8% for the week.4 Industrial metals prices fell even more after China announced it will release copper, aluminum, zinc and other metals supplies from their government’s strategic reserves in an effort to drive key input prices down.5
Retail sales for May disappointed with a 1.3% month-over-month decline for sales of goods and food services compared with consensus expectations for a 0.6% decline. However, the April numbers were revised upward, from unchanged to a positive 0.9% on a month-over-month basis. On a year-over-year basis, sales were up 28% and clothing & accessories was the strongest category with a 200% increase.6
US industrial production rose 0.8% in May from the prior month, or 16.3% on a year over year basis, ahead of expectations. However, the April gain of 0.5% was revised down to 0.1%, making the monthly comparison easier.7
The producer inflation index was higher than expected as the core rate of 4.8% accelerated from prior record highs of 4.1% in April and 3.1% in March.8 This data point served to increase expectations for overall US inflation.
Software technology stocks – including G33 holdings DocuSign Inc. (DOCU), ServiceNow Inc. (NOW), Splunk Inc. (SPLK), Sprout Social Inc. (SPT), Square Inc. (SQ) and Varonis Systems Inc. (VRNS)— outperformed the rest of the markets last week asinvestors turned away from more cyclical names toward this sector. These names rose between 6.7% and 14.2% last week.
Did you know…
In 2020, the S&P 500 generated a positive return of 18%. However, if you had missed the five best trading days of the year, the return of the index would have been closer to negative 18%.
Mariann Montagne, CFA
1 JP Morgan Weekly Market Recap 6-22-21
2 Federal Reserve Open Market Committee Meeting Summary 6-16-21 3 US Treasury
5 S&P Global, “China Confirms Metal Stocks Release from State Reserves 6-16-21
6 US Census Bureau 6-15-21
7 Federal Reserve 6-15-21
8 FRED Economic Data (Year-Over-Year, Monthly) 6-16-21
9 All weekly changes in company stock prices: Yahoo Finance
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