Weekly Market Roundup
Equities ground higher for a third consecutive week, with the S&P 500 touching a fresh all-time high on Thursday before easing modestly into Friday's close. The S&P 500 finished the week up +0.39%, the Nasdaq added +0.16%, and the Dow Jones was roughly flat at +0.13%. Small caps and international equities outpaced the large-cap benchmarks, with the Russell 2000 up +1.05% and the MSCI ACWI Ex-USA up +1.32%. The week's main data point was Wednesday's July CPI report, which came in line with expectations: headline inflation rose +0.1% month-over-month and +3.4% year-over-year, while core CPI increased +0.2% month-over-month and +2.5% year-over-year. The in-line print reinforced the softer labor market data from the prior week and kept the broader disinflation narrative intact.
Encouragingly, participation broadened out this week. The equal-weight S&P 500 (RSP) advanced +1.2%, and gains were spread across healthcare, high dividend, and multi-cap value names rather than concentrated in a handful of mega-cap names, a healthier setup than we have seen in recent weeks. The Treasury curve continued to steepen into Friday's close, and volatility fell further across both equities and bonds: the VIX ended the week near 14.92, comfortably within the lower-volatility range, while bond market volatility posted a sharp weekly decline following the CPI report.
Retail sales and consumer data added some nuance to an otherwise constructive week. Friday's retail sales report showed its largest monthly decline in over a year, and a preliminary read on consumer sentiment softened as well, with survey respondents citing continued concern about inflation. Commodities were mixed: gold extended its recent advance as the U.S. dollar remained bearish on both trend and trade, while crude oil pushed back above its recent trading range.
This week's calendar is lighter on top-tier economic data, but still offers useful signal. Wednesday's release of the FOMC's July meeting minutes will be watched closely for any additional detail on the Committee's thinking heading into September, particularly in light of the softer jobs and inflation data from the past two weeks. Housing starts and industrial production on Tuesday, along with regional manufacturing surveys from New York on Monday and Philadelphia on Thursday, round out the read on broader economic activity. On the earnings side, Target and Walmart report this week, giving us a timely read on the health of the consumer following Friday's soft retail sales print, ahead of Nvidia's closely watched results later this month.
This was, on balance, a constructive week. The S&P 500 notched another record high, volatility remained contained, and, encouragingly, the gains were more broadly distributed across sectors than we have seen in recent weeks. That kind of broadening participation, rather than a continued reliance on a small handful of mega-cap names, is a healthier foundation for a sustained advance, and it is a trend we would like to see continue.
At the same time, the softer retail sales print and weaker consumer sentiment reading are worth watching. The consumer has been a consistent source of strength, and a meaningful slowdown there would be a more important signal than any single data point on inflation or employment. We do not view one week of data as a trend, but it is on our list to monitor alongside next month's readings.
Overall, the combination of contained inflation, a Fed that appears in no hurry to move, and a calmer volatility backdrop supports a constructive, but not complacent, posture. We remain diversified across market capitalizations, sectors, and geographies, and we believe that positioning is well suited to an environment where the data, while generally supportive, is still sending some mixed signals.
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