- Benchmark Stocks Rise Third Week
The S&P 500 clinched a third straight weekly gain after closing at successive all-time record highs on Thursday and Friday. Stocks have traded mostly sideways since early May as investor optimism over business recovery has been tempered by signs of escalating inflation. Over the past three months, core consumer prices increased at a 5.2% annualized pace, the most since 1991.
- For the Week…
The S&P 500 gained 0.43% last week, the Dow Industrials fell 0.80% to end a two-week winning streak, while the tech-heavy Nasdaq Composite climbed a fourth week, advancing 1.85%. In a reversal of style performance, Growth dominated Value across the board, with Small cap Growth (+3.5%) outperforming most versus a 1% gain on Small cap Value.
- CPI Runs Hot
The Consumer Price Index came in hotter than expected in May. The headline CPI rose 0.6% M/M (+0.4% expected) and the core CPI jumped 0.7% (+0.4% expected) last month. CPI inflation reached 5.0% Y/Y, the highest since 2008 and annualized core consumer prices rose 3.8%.
- Financials Backpedal
Six of the 11 major sectors posted gains last week, with Real Estate (+2.02%), Healthcare (+1.95%) and Consumer Discretionary (+1.63%) rising the most. Technology (+1.39%) was the fourth strongest performer, while Financials (-2.37%), Materials (-2.02%) and Industrials (-1.73%) lagged the most.
- Treasurys Rally
Treasury prices climbed again last week, sending the yield on benchmark 10-year Treasury notes down nearly nine basis points to close Friday at a three-month low of 1.46% The U.S. Dollar Index strengthened a third week, rising 0.46% and U.S. WTI crude oil futures advanced 1.4% to end the week at $70.91/barrel.
- The S&P 500 has a total return of more than 90% since the March 2020 low. Optimism over the economic reopening has resulted in double digit gains so far in 2021. High valuations, however, could slow the pace of returns going forward. The S&P 500 is near its highest valuation level since 2000 based on price-to-forward sales expectations.
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.