Author: Ryan Frydenlund

Ryan Frydenlund

Financial News and Portfolio Management Discussion through July 24th

US stocks ended the week at new record highs on a strong start to earnings season. The S&P 500 climbed 2.0% and Dow rose 1.1% for the week. Abroad, the FTSE All World Ex US was down 0.5% for the week. The yield on the 10-year Treasury was flat over the week ending at 1.30%.

Of the 110 S&P 500 companies to report earnings to date, 85% have beaten analyst forecasts.

OPEC and Russia led oil producers agreed to restore all the cuts that were made to production during the pandemic with plan to gradually ramp up production.

Initial jobless claims rose to 419,000 when a decline was expected.

The ECB left their benchmark interest rate unchanged after their meeting and said they would keep the benchmark rate at or below its current level until they see inflation stabilize around 2%.

In June, median US home prices reached another record rising 23% from a year ago.

US business activity continued to expand in July, but at a slower pace.

Financial News and Portfolio Management Discussion through July 17th

US stocks fell over the week over concerns over future economic growth and inflation. The S&P 500 fell 1.0% and Dow dipped 0.5% for the week. Abroad, the FTSE All World Ex US was up 0.6% for the week. The yield on the 10-year Treasury fell over the week to end at 1.30%, its lowest level since mid-February.

The CPI rose 5.4% from a year ago, the highest 12 month increase since 2008 and higher than expected.

In comments in front of Congress, Fed Chief Powell said he expected inflation to moderate after bottlenecks and supply chain constraints unwind, but the central bank wouldn’t hesitate to raise interest rates to keep inflation in check.

China’s economy grew 7.9% in the second quarter, in line with estimates. June saw better than expected numbers on factory output, retail sales, and capital investment.

Weekly initial unemployment filings fell to 360,000 over the past week.

Consumer sentiment fell in early July on inflation worries.

US retail sales rose 0.6%, while a drop was expected.

June Market Commentary

Market Commentary

US stocks continued their ascent in June, closing the month out at an all time high on the strength of economic news, reduced inflation fears, and hopes for additional stimulus. The President and a group of Senators reached a $1 trillion infrastructure plan after weeks of negotiations, however the likelihood and timing of passage are uncertain. Vaccinations continue with roughly 65% of the eligible US population over age 12 vaccinated, however the recent pace of vaccinations has slowed considerably. June economic news continued to show a generally improving economy. US job growth picked up pace in May with 559,000 jobs added, but was short of expectations. The unemployment rate fell to 5.8% from 6.1%. Manufacturing activity picked up pace and topped expectations. US home prices rose 24% in May from a year earlier and consumer confidence rose. On the other hand, US CPI rose 5% in May. It was the largest jump in 13 years, while core prices rose 3.8%, the most since 1992. Retail sales fell 1.3%, and the reading on durable goods orders disappointed.

Foreign stocks fell over the month as progress on vaccinations was countered by significant spread of the Delta variant of the coronavirus. The new highly contagious variant has slowed reopening plans, and, as a result, economic growth around the world. France, Italy, and Spain have extended government support measures for businesses as the region continues to struggle to bounce back from the pandemic. The ECB upgraded its economic forecast for the region, but said it would keep its aggressive monetary policies in place. Despite the headwinds, eurozone business activity is growing at the fastest pace in 15 years. China’s economy has cooled recently. While factory output remained strong, investment and domestic consumption were below expectations. China’s factory activity eased slightly in May, but was in line with expectations and the non-manufacturing sector improved. Emerging markets trailed developed markets over the quarter and year to date, but outpaced developed markets in June and over the trailing twelve months.

Bonds rose in June as investors began to doubt the recent uptick in inflation will be durable. After the Fed’s June meeting they estimated they would begin raising the Fed Funds Rate by the end of 2023, earlier than they previously projected. In prepared testimony before Congress, Fed Chief Powell said he expected job growth to improve in the coming months and inflation pressures to ease. The Fed also announced it would begin to unwind the corporate bond ETFs it purchased last year as part of its emergency measures with the holdings being liquidated by the end of the year. The 10-year Treasury yield continued to fall in June to end at 1.45%, down from 1.58% to start the month. It has fallen notably from the highs for the year reached in late March. However, it is up from 0.93% to start the year. Credit bonds led the way over the month and quarter, while Muni bonds were the top performer for the year to date. Longer term bonds topped shorter term bonds in June and the second quarter, but shorter term bonds have outpaced so far in 2021.

Index PerformanceJune2QYear to DateTrl. 12 Months
US Stocks (Russell 3000)2.47%8.24%15.11%44.16%
Foreign Stocks (FTSE AW ex US)-0.54%5.62%9.59%36.79%
US Bond Mkt. (BBgBarc Int. Gov/Cred)0.08%0.98%-0.90%0.19%
Municipal Bonds (BBgBarc 1-10 Yr Muni)0.05%0.51%0.31%2.19%
Cash (ICE BofA ML 3-Mo T-Bill)0.00%0.00%0.02%0.09%

Financial News and Portfolio Management Discussion through July 3rd

US stocks ended the week at new record highs on positive economic news. The S&P 500 was up 1.7% and Dow advanced 1.0% for the week. Abroad, the FTSE All World Ex US fell 1.2% for the week. The yield on the 10-year Treasury fell over the week to end at 1.44%, its lowest level since early March. Oil prices ended the week at $75.16, their highest level since 2018.

The June jobs reports showed employers added 850,000 jobs over the month beating expectations. It was the largest increase in 10 months. The unemployment rate ticked up from 5.8% to 5.9% due to more Americans entering the labor pool.

New weekly unemployment filings fell to 364,000 hitting a new pandemic low.

June auto sales remained strong though cooled from earlier in the quarter due to limited supply. The average sales price hit a record.

OPEC and other oil producers failed to reach an agreement on increasing oil supply.

Consumers spending rose 0.7% in May and April was revised up to 0.9% from 0.5% as consumers opened their wallets.

Consumer confidence rose in June.