All data is for the week ended October 1, 2021
Stocks
All major equity indices were down last week as investors were concerned with the ongoing Chinese Evergrande issue and its potential to influence other markets, together with the global supply problems and rising energy costs. These issues along with rising interest rates reduced the appetite for risk. The S&P 500 declined 2.19%, the Russell 2000 eased 0.24%. and the NASDAQ dropped 3.19%. International developed markets (MSCI EAFE) fell 3.11% as emerging markets (MSCI EEM) lost 1.40%.1
Fixed Income
The yield curve steepened last week as the 2-year rate on Treasury issues declined 2 basis points while the 10-year and the 30-year rates rose by 1 and 5 basis points, respectively. The 10-year rate finished the week at 1.48%.2 Mortgage rates on 30-year loans were unchanged at 3.10%.1
Commodities
Oil prices have moved up to nearly a three-year high in advance of today’s meeting of OPEC+ oil producing countries. Rising demand as global economies gear back up – together with last week’s blackouts in China – are occurring as oil supplies from the Gulf Coast have been cut due to Hurricane Ida. West Texas crude oil finished the week at $75.88 per barrel, up 2.57% for the week and 56.78% higher year to date.3
Economic Data
Real gross domestic product, a measure economic activity, grew at an annual rate of 6.7% last quarter, a tick higher than the previously reported second quarter growth rate and higher than the first quarter’s 6.3% growth. The upward revisions to the June quarter’s economic growth reflect several factors including higher spending in services, led by restaurants and hotels.4
Consumer inflation remained elevated in September with a year-over-year rate of 4.3%, the highest level is 30 years and a tick higher than the prior month. Personal consumption expenditures excluding volatile food and energy rose 3.6% year-over-year, also a 30-year high. Additionally, personal saving as a percentage of disposable personal income was 9.4%.5,6
Company News7
Dollar Tree Inc. (DLTR), a Core Select and Contrarian Choice holding, announced it would begin pricing items above their historical $1 mark in an attempt to pass on rising costs.8 The board also announced an increase in its share repurchase authorization to total $2.5 billion.9Shares rose 15.9% last week.
Merck Inc. (MRK), a G50 holding, shares rose 10.6% for the week after announcing that a study ofits new pill, molnupiravir, proved it significantly reduced the risk of hospitalization or death for Covid-19 patients with moderate to serve symptoms—the first treatment of its kind. Merck plans to submit an application for Emergency Use Authorization to the U.S. Food & Drug Association as soon as possible along with other worldwide applications.10
Major oil producers, including Energy Sector strategy holdings BP plc (BP), ConocoPhillips (COP) and Exxon Mobil Corp. (XOM) – some of which are also held in the G50 and Core Select – rose 5-8% last week on the outlook for more constrained supplies of energy. See Commodities above for details.
Did you know…
October 8 has been designated National Fluffernutter Day in honor of the sandwich that pairs marshmallow cream with peanut butter. You may want to stock up on the sumptuous stuff before everyone else gets there!
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 10-4-21
5 Bureau of Economic Analysis 10-1-21
6 CNN “A Key measure of inflation surged to a new 30-year high”10-1-2021
7 All weekly changes in company stock prices: Yahoo Finance
8 Dollar Tree press release (Price Increases) 9-28-21
9 Dollar Tree press release (Share Repurchase Authorization) 9-29-21
10 Merck press release 10-1-21
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