Weekly Market Roundup
Markets bounced back in a shortened week, with trading closing Thursday ahead of the Independence Day holiday. The S&P 500 gained +1.78%, the Nasdaq added +2.12%, and the Dow Jones rose +1.45%. The Russell 2000 was the lone decliner at -0.42%. Bonds were under pressure for much of the week, with yields moving higher early as markets leaned toward a more hawkish rate outlook, before Thursday's jobs report shifted the tone.
June nonfarm payrolls came in well below consensus expectations, a soft print that reinforced the view that the labor market is beginning to cool from its earlier strength. Yields pulled back intraday on the news, though they still ended the week modestly higher across the curve, leaving the Bloomberg U.S. Aggregate slightly negative at -0.50%. Crude oil extended its decline, continuing a pattern that has been in place since spring.
The VIX pulled back to 16.06, returning toward the lower end of its recent range. Market conditions have shifted to a setup where dealers are positioned to cushion rather than amplify moves, which tends to keep intraday swings contained, a notably calmer backdrop compared to recent weeks.
The calendar is relatively light. FOMC meeting minutes on Wednesday will be closely read for any signals on how the Fed is processing the recent softness in labor data and inflation. Initial and continuing jobless claims on Thursday will be the next labor market read following last week's soft payrolls. ADP employment on Tuesday offers an early preview. Existing home sales on Thursday will give us a read on housing, which remains sensitive to rate movements, and the IEA monthly oil report on Friday will be worth watching given the ongoing decline in crude prices.
With the calendar now flipping to July, we move into Q2 earnings season. This is the stretch we have been writing about for several weeks, and the one we flagged as carrying potential headwinds. Companies will be reporting against a backdrop of slowing growth and falling commodity prices, and the comparables from a year ago remain a high bar to clear. The defensive repositioning we have been building in our portfolios, adding Healthcare, Real Estate, and long-term Treasuries, reflects our view that this earnings season will reward patience over aggression. We will be watching closely for any shifts in corporate guidance that speak to the outlook for the second half of the year. We remain disciplined and measured as we enter this new quarter.
If you have any questions about the above, please reach out to us to set up a one-to-one meeting so we can review your situation.
Sincerely,
President
SBC Investment Management
P: (602) 641-5996 · M: (319) 520-2033 · E: bandrus@sbcinvestmentmanagement.com
Investment Analyst, Junior Portfolio Manager
SBC Investment Management
P: (435) 775-2950 · M: (435) 590-8317 · E: jrehkop@sbcinvestmentmanagement.com