The Bottom Line
● Equities returned to their winning ways after last week’s fall. All major global equity indices posted gains for the week, are now positive for the year–most with double‐digit advances, and are at or near all‐time highs.
● The yield on the U.S. 10‐year Treasury rebounded from its lowest levels since February, to end the week at 1.30%after strong economic data showed the recovery continuing despite the spread of the Delta variant.
● AccordingtoFactSet,withabout90% of S&P500 companies having reported Q2 results, earnings growth is running at a blistering +88.7% pace with a 87% beat rate.
August brings a return to record highs
Global equities posted weekly gains, turning our market snapshot to the right entirely green for the week, and now for the year. The S&P 500 closed the week at another record high, its 44th record closing of 2021, for a +0.9% gain for the week. But Small Cap Value stocks were the best asset class for the week with a +1.1% gain, despite a ‐1.9% drubbing on Wednesday. A better‐than expected July employment report and another week of strong corporate earnings helped investors overcome concerns about rising inflation, the fast‐spreading Delta variant, and a regulatory crackdown on Chinese technology stocks. Earlier in the week data showed better‐than‐expected Factory Orders and an acceleration in the ISM Services Index to a record high. But it was the labor market that really bolstered stocks later in the week with fewer‐than‐expected unemployment claims on Thursday, followed by a stellar July employment report on Friday with upside surprises in new payrolls, a lower unemployment rate, better labor participation rates, as well as higher wages and hours worked. After several weeks of yields falling, the bounty of encouraging economic data helped Treasury yields reverse higher and the Treasury curve steepen.
Digits & Did You Knows
(NOT SO) FRIENDLY SKIES — The Federal Aviation Administration has received 3,715 reports about unruly passengers in 2021 and has initiated 628 investigations, compared with fewer than 150 in 2019. It is now asking airports and law enforcement to help mitigate the poor behavior (source: Federal Aviation Administration, WSJ).
DEBT LIMIT DEBATE — The nation’s debt ceiling limit was reset on Sunday 8/01/21 to our government’s outstanding debt as of that date (approximately $28.5 trillion). Ultimately the government will “run out of cash,” mostly likely in October or November, unless the debt ceiling is raised again (source: CBO, BTN Research).
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Source: Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange‐traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds may be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐YieldBond(iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 ValueETF);MidGrowth(iSharesRussell Mid‐CapGrowthETF);MidValue (iSharesRussell Mid‐Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4%Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”).
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