by Mariann Montagne
All data for the week ended August 25, 2023
Stocks
Stocks were mixed once again last week with the US benchmark S&P 500 rising 0.84%, the Russell 2000 declining by 0.29% and the Nasdaq adding 2.27%. Overseas the developed markets index (MSCI EAFE) declined by 0.18% while the emerging markets index (MSCI EEM) gained 0.74%. In the US the best performing sectors were technology and consumer discretionary while the laggards were energy and consumer staples. By style, growth outperformed value and large caps outperformed mid- and small caps.
Fixed Income
Yields rose on the short maturities of government debt while declining for longer maturities. The benchmark 10-year treasury declined by 1 basis point to 4.25%. The spread between 2-year and 10-year treasuries widened to 78 basis points from 66 basis points a week earlier.2 This follows comments from Federal Reserve chair Jay Powell at the Jackson Hole meeting that did not commit to any actions the central bank may take at its next meeting as the Fed continues to monitor pressures on inflation.3
Commodities
Prices for industrial metals as well as energy have been holding up well this year. This comes despite a sharp decline in Chinese economic growth. China’s private sector has contributed very little in terms of growth in fixed investments. However, the government sector has been spending, with utility expenditures up 30% and investments in renewable energy nearly doubling. Additionally, China has stepped up their imports of energy, sustaining global prices for oil.4
Economic Data
Sales of existing homes in July declined 2.2% from June, led by condos and co-ops which declined 4.5%. The median price of a home rose 1.9% on a year-over- year basis to $406,700 but was down from the prior month. The inventory of unsold homes rose 3.7% on a month-over-month basis but declined 14.6% on a year-over -basis as mortgage rates were 7.09% on average in mid-August versus 5.13% a year ago.5
The manufacturing index dropped 2 points to 47 for July as a renewed drop in output and steeper decrease in new orders weighed on the overall performance of the sector. Some of the decline in new orders reflects less interest in building inventories since supplies appear to be more available. The services index, meanwhile, dropped 1.3 points to 51.0. Note any reading above 50 indicates growth.6
Company News7
Accenture plc (ACN), a G50 holding, shares rose 5.22% last week. The company will speak at the Alphabet Inc. (GOOG) Google Next conference this week to detail its collaboration with Google to bring the best of security utilizing artificial intelligence to a variety of organizations.8
Palo Alto Networks (PANW), a Core Select and G33 holding, shares rose 10.05% after the company reported quarterly earnings that were well in excess of consensus expectations. The cyber security systems firm also issued billings and earnings guidance for the coming fiscal year that exceeded consensus expectations.9
Splunk, Inc. (SPLK), a Core Select and G33 holding, shares rose 18.93%. The company reported revenue and earnings that beat consensus expectations. Management also raised guidance for the current quarter and the full year along with a rise in annual recurring revenue, a key measure of future growth.10
Did You Know…
Something that happens “once in a blue moon” really isn’t rare. Blue moons refer to a month in which a full moon appears twice, as it will this month. Since a full moon occurs every 29.5 days, we actually have a blue moon month about every 2 ½ years. That means it’s more often than the Olympics and a presidential election.
Mariann Montagne, CFA
Portfolio Management Consultant
Sources:
1 JP Morgan Weekly Market Recap 8-28-23
3Federal Reserve Bank, “Powell Speech on Inflation – Progress and Path Ahead” 8-23-23
4 Barron’s, “As China’s Growth Slows, Commodities Are Holding Up” 8-25-23
5 National Association of Realtors 8-22-23
6 S&P Global Flash US Composite Index 8-23-23
7 All Weekly changes in company stock prices from Yahoo Finance
8 Accenture press release 8-23