PAS Weekly Commentary

Record Closing Highs Amid Falling Rates and Mixed Data

The S&P 500 (+2.0%) and Nasdaq Composite (+3.5%) set fresh all-time highs on this holiday-shortened week.

Gains in the mega cap space had an outsized impact on index gains while the equal-weighted S&P 500 closed with a 0.4% decline this week.

Tesla (TSLA) was a top performer from the mega cap space, jumping 27% on better-than-expected Q2 delivery numbers.

The price action in mega cap names led the S&P 500 communication services (+3.9%), consumer discretionary (+3.8%), and information technology (+3.9%) sectors to close at the top of the leaderboard among the 11 sectors.

Growth worries were part of the story this week after the ISM Manufacturing Index for June reflected a contraction in activity (i.e. sub-50 reading) and the Employment Situation Report for June reflected a softening in labor market conditions. The main concern for stock market participants is how a slowdown in economic activity and consumer spending may impact earnings growth.

Still, the jobs report went the market's way in terms of rate cuts and coincided with a recalibration of rate cut expectations. The likelihood of a 25-basis points rate cut at the September FOMC meeting moved to 76.3% on Friday from 64.1% one week ago, according to the CME FedWatch Tool.

Treasury yields fell this week in response to the data. The 10-yr note yield slid seven basis points to 4.27% and the 2-yr note yield declined 12 basis points to 4.60%. The drop in rates did not translate into broad support for equities due to the emerging worries about an economic slowdown and softening labor market that may lower earnings growth.

  • Nasdaq Composite: +22.3% YTD
  • S&P 500: +16.7% YTD
  • Dow Jones Industrial Average: +4.5% YTD
  • S&P Midcap 400: +4.1% YTD
  • Russell 2000: -0.02% YTD

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Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Data and rates used were indicative of market conditions as of the date shown and compiled by Briefing.com. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. Each company’s security affects the index in proportion to its market value. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Dow Jones Industrial Average is a widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service-oriented firms. Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

Park Avenue Securities LLC (PAS) is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker/dealer offering competitive investment products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC.

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2024-177812 (Exp. 10/24)

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