Weekly Recap | July 31, 2023

July 24-28, 2023 Recap

Nasdaq Rebounds

S&P 500 Advances Third Week
Despite Wednesday’s widely expected Fed rate hike, all three major U.S. equity indices capped solid weekly gains with the S&P 500 up a third-straight week. Investors grew increasingly hopeful about a soft-landing scenario amid ongoing labor market strength and cooling inflation. Second-quarter earnings are also continuing to come in better than expected. More than half of S&P 500 companies have reported results with 80% showing a positive earnings-per-share surprise, topping the five- and 10-year averages, while 64% posted a positive revenue surprise.

For the Week…
The S&P 500 climbed 1.03% and the Dow Jones Industrial Average gained 0.66%. The Nasdaq Composite jumped 2.03%, more than erasing its 0.57% prior week loss. Smaller companies outperformed for a third straight week with the Russell 2000 index up 1.09%. However, the large cap Russell 1000 Growth Index re-asserted its dominating leadership, up 1.65% last week and up 33.17% year-to-date.

Another Interest Rate Hike
On Wednesday, FOMC policymakers voted to raise the Fed Funds rate by 0.25% to a range of 5.25% - 5.50%, a 22-year high. As was widely expected, the June rate pause proved to be temporary, but according to CME futures contracts, the odds are low for a September hike at just 20%.

Weekly Sector Insights
Seven of the major S&P 500 sector groups advanced last week, led by Communication Services (+6.85%), Materials (+1.83%), and Energy (+1.72%). Industrials (+0.57%) gained the least while Utilities (-2.08%) and Real Estate (-1.80%) fell the most. Technology and Communication Services are this year’s top performers, up 46.41% and 45.75% respectively.

Treasury Yields Rise
The yield on 10-year Treasury notes ended Friday at 3.971%, up 0.13% on the week. Meanwhile, spot gold prices eased 0.27% and WTI oil futures jumped 4.55%, ending Friday at $80.58/barrel.

The Latest from @CeteraIM

After-Tax Incomes Rise

Consumer Spending Tops Forecast  

Jobless Claims at 5-Month Low

Economic Calendar

Monday, July 31
Chicago-area Business Barometer.

Tuesday, August 1
ISM Manufacturing PMI, Job Openings, Construction Spending.

Wednesday, August 2
Mortgage Activity, ADP Private Payrolls.

Thursday, August 3
Jobless Claims, Challenger Layoffs, Labor Costs and Productivity, ISM Services PMI, Factory Orders.

Friday, August 4
Nonfarm Payrolls, Unemployment Rate, Hourly Wages.

The U.S. economy grew faster than expected in the second quarter. The preliminary real GDP estimate for Q2 growth was +2.4% (seasonally adjusted and annualized), ahead of the consensus expectation of +1.5%. Economic growth accelerated from 2.0% growth in Q1. Positive contributors to Q2 GDP growth include consumer spending, nonresidential fixed investment, government spending, and inventory investment.

^{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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^{No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.}

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^Glossary

^{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 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 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 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.}