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Weekly Recap | June 12, 2023

Weekly Recap | June 12, 2023

June 12, 2023
Weekly Recap

June 5-9, 2023 Recap

S&P 500 Posts Fourth Straight Weekly Gain

Nasdaq Climbs Seventh Week
U.S. equities extended gains last week with the S&P 500 briefly topping 4,300 on an intra-day basis. It was another solid week for smaller capitalized companies after lagging for much of the spring, as the Russell 2000 small cap benchmark index outperformed with a 1.92% gain. The bullish case is still largely underpinned by easing inflation, with the Fed nearing the end of its tightening campaign.

For the Week…
The S&P 500 rose 0.41%, the Dow Jones Industrial Average gained 0.34%, and the tech-heavy Nasdaq Composite crept 0.15% higher in its seventh weekly gain, its longest winning streak since November 2019.

Closely Watched Indicators
May’s key ISM services index remained in expansion but missed forecasts (50.3 vs. 52.3) and slowed from 51.9 in April. Notably, its employment component shifted into contraction while prices paid edged lower. Separately, there was a sizable 28,000 jump in new unemployment claims to 261,000 last week, the highest level of weekly jobless claims since October 2021. Both reports help provide cover for a likely June Fed rate pause.

Weekly Sector Insights
Seven of the S&P 500’s 11 major sectors posted gains last week, led by Consumer Discretionary (+2.45%), Utilities (+1.96%), and Energy (+1.78%). Materials (+0.56%) gained the least while Technology
(-0.66%) and Consumer Staples (-0.50%) led to the downside.

Treasury Yields Nudge Higher
The yield on benchmark 10-year Treasury notes nudged 0.05% higher last week to end Friday at 3.740%. Meanwhile, the yield on policy-sensitive two-year Treasury notes ended near 4.54%. The 2-year yield can be seen as an indication of where the Fed Funds rate will be a year from now. The current Fed Funds range is 5.00% to 5.25%, so this could imply the market thinks Fed rate cuts are coming next year. 

The Latest from @CeteraIM

Sector Recovery Insights

Rent Prices are Cooling Fast  

Bullish Sentiment Surges

Economic Calendar

Monday, June 12
No Major Releases.

Tuesday, June 13
Consumer Price Index, Small Business Optimism.

Wednesday, June 14
Mortgage Activity, Producer Price Index, FOMC Rate/Policy Decisions.

Thursday, June 15
Jobless Claims, Retail Sales, Import/Export Prices, Regional Mfg Activity, Industrial Production, Business Inventories.

Friday, June 16
Consumer Sentiment.

Used car prices fell 2.1% in May, declining for the second straight month. Prices unexpectedly rose in the first quarter, but we are seeing a reversal in the second quarter. If this trend continues, it’s another disinflationary tailwind for the economy. Used vehicle prices are elevated versus pre-pandemic levels, but prices are roughly 13% lower than the January 2022 peak.

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 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.