Weekly Market Roundup
Equities pulled back after their recent run, weighed down by a bond market selloff and renewed geopolitical tension. The S&P 500 fell -0.89% on the week, the Nasdaq declined -1.71%, the Dow Jones slipped -0.79%, and small caps lagged further, with the Russell 2000 down -1.28%. International equities held up better, essentially flat at +0.03%, as the U.S. dollar continued to weaken. The week's central development was the Treasury's mid-week announcement of expanded bond buybacks, aimed at calming bond market volatility ahead of next month's inflation data. Yields initially fell on the news but snapped back to their prior, higher levels by Friday's close, suggesting markets viewed the measure as insufficient. Renewed U.S. geopolitical tension in the Middle East added to the cautious tone as well, with crude oil edging modestly higher.
Below the surface, sector performance was uneven. Healthcare was the standout, notching a new all-time high mid-week before paring some of those gains late in the week, while more defensive, bond-proxy sectors such as utilities lagged as the broader tone stayed reflationary. Gold extended its powerful run, rising further on the week and now up meaningfully over the past month, as the dollar slid to an 11-week low; silver and copper also broke out to recent highs. The VIX ended the week at 15.13, down sharply on Friday alone even after touching higher levels earlier in the week as bond volatility took center stage.
Elsewhere, bitcoin posted its best week in roughly two years, consistent with a risk backdrop that stayed selectively risk-on outside of mega-cap technology and small caps. Friday also marked one of the largest options expirations of the year by notional value, which passed without major disruption to trading.
This week's calendar builds toward Wednesday's Core PCE report, the Fed's preferred inflation gauge, alongside the second estimate of second-quarter GDP and readings on personal spending and durable goods orders. Consumer confidence, new home sales, and an ADP employment report round out the early-week data on Tuesday. The most closely watched event, however, is likely to be the Fed's annual Jackson Hole Symposium on Thursday and Friday, where commentary from policymakers will be parsed closely for signals on the path of rates into the fall. Initial jobless claims on Thursday and the University of Michigan's consumer sentiment survey on Friday close out the week.
This was a more mixed week than we have seen recently, and a useful reminder that the market's recent calm should not be taken for granted. The pullback in equities, concentrated in technology and small caps, came alongside a bond market that is still working through how much confidence to place in the Treasury's efforts to manage volatility ahead of next month's inflation data. We would rather see confirmation from the data itself, Wednesday's Core PCE report in particular, than assume the policy response alone settles the question.
The continued strength in gold, silver, and other real assets, alongside a weakening dollar, is a trend we have been monitoring for some time, and it remains a useful diversifier in the current environment. Healthcare's move to fresh highs this week is a continuation of a trend rather than a new one: it has been one of our strongest long positions over the past three months, and we are glad to see that thesis continue to play out.
With the Fed's Jackson Hole Symposium and Nvidia's earnings both on the calendar in the coming days, we expect the next two weeks to be more consequential than most for the direction of both rates and risk assets. Our approach remains the same: stay diversified across asset classes and geographies, and let the data, rather than any single week's price action, guide our positioning.
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