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Weekly Recap | August 30, 2021

Weekly Recap | August 30, 2021

August 31, 2021
Weekly Recap

August 23 - 27, 2021 Recap

Equities Climb on Dovish Taper Tone

Three Record Highs Last Week
All three U.S. major equity averages finished higher last week with the S&P 500 posting three new record highs and closing Friday at its 52nd all-time high of the year. Last week’s primary catalyst were comments from Fed Chairman Jerome Powell at this year’s virtual Jackson Hole central banker’s symposium, saying that pandemic-associated stimulus will be withdrawn judiciously and gradually. He added that while economic recovery is making progress, the central bank needs to be cautious as reversing stimulus too early could be “particularly harmful.” Based on statements from other Fed officials, policymakers agree that tapering monthly bond purchases would be appropriate by the end of the year, perhaps starting as soon as their September 21-22 meeting.

For the Week…
The S&P 500 advanced 1.54%, the Dow Jones Industrial Average gained 0.96% and the tech-heavy Nasdaq Composite surged 2.82%. The S&P 500 has posted gains in four of the past six weeks, up 2.72% so far in August.

Preliminary Markit PMIs Weaken
The advance “flash” IHS Markit manufacturing and services activity measures for August shifted into lower gears with growth slowing to an eight-month low. The composite PMI index reading slowed to 55.4 from a final July level of 59.9. Capacity pressures, material shortages and the spread of the Delta variant weighed on output. Readings of 50 and above equate to expansion.

Energy Rebounds
Seven of the 11 major sector groups posted gains last week, led by Energy (+7.34%) after falling 6.98% the week prior. Financials
(+3.49%) and Communication Services (+2.81%) were also top performers, while Technology (+1.44%) gained the least. Utilities
(-2.03%) and Consumer Staples (-1.36%) declined the most.

Treasury Prices Ease
Treasury prices edged lower last week as investors became comfortable with the Fed’s more dovish outlook for tapering asset purchases. The yield on 10-year Treasury notes rebounded by four basis points to end the week at 1.308%. The U.S. Dollar Index weakened by 0.87% last week after climbing 1.06% the week prior. After a 9% decline the previous week, U.S. WTI crude oil futures surged 10.62% for its best weekly performance since June 2020.

The Latest from @CeteraIM

Weekly Recovery Levels

U.S. Ports Disruptions

Earnings Expectations Roar

Economic Calendar

Monday, August 30
Pending Home Sales, Dallas Fed Manufacturing.

Tuesday, August 31
Case-Shiller Home Prices, MNI Chicago PMI, Consumer Confidence.

Wednesday, September 1
Mortgage Activity, ADP Private Payrolls, ISM & IHS Markit Final August US Manufacturing.

Thursday, September 2
Jobless Claims, Labor Cost & Productivity, U.S. Trade Deficit, July Final Durable Goods Orders.

Friday, September 3
Nonfarm Payrolls, Unemployment Rate, ISM & IHS Markit Final Aug U.S. Services Activity.

The inventory of new homes for sale, where construction has not started, is at a 15-year high. Demand for housing remains strong, but builders are postponing construction because of supply and cost issues with material, land and labor. The inventory of completed homes is near a record low.

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.

The Bloomberg Barclays US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.

The Bloomberg Barclays US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.

The Bloomberg Barclays US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.