Market Data as of Week Ending: 8/6/2021 unless noted otherwise
U.S. stock prices moved higher last week as a better-than-expected July labor report provided some optimism which led most indices to record highs. Stocks have traded in a narrow range lately, with just a single percentage point separating the S&P 500’s high and low points of the past two weeks. With the vast majority of earnings season behind us, as of Friday, 87% of the S&P 500 companies that had reported second-quarter results exceeded analysts’ earnings estimates, according to FactSet. That so-called ‘beat rate’ ranks above the 75% five-year average, and it’s currently the highest rate since FactSet began tracking that data in 2008. Large cap companies narrowly lagged their small cap peers while outperforming mid cap companies, as value mostly outperformed growth. Financials, utilities, and information technology were the best performing sectors while consumer staples, materials and industrials lagged. Developed foreign stocks in Europe and Asia edged out U.S. stocks while Emerging Market stocks outperformed both developed foreign and U.S. markets.
U.S. Treasury yields rebounded, breaking a string of five consecutive weekly yield declines, as the 10-year climbed back to 1.30%. Short-term high yield bonds were the best performing segment while long-term corporate bonds lagged. Investment grade corporate bonds ended the week with yields near the same level at approximately 2.0% and high yield corporate bonds rose to just below 4.7%.
Economic data was overall positive for the week. July’s ISM manufacturing data was one of the few negatives as the index dipped to a six-month low of 59.5% as manufacturers struggled with broad shortages of supplies and labor. U.S. factory orders rose 1.5% in June on stronger demand for airplanes, oil and other industrial goods. The service side of the economy continued its explosive growth in July as the ISM services index surged to 64.1%. The U.S. added 943,000 jobs in July, marking the biggest increase in nearly a year, which brought the unemployment rate to a pandemic low of 5.4%. The BoE, which left its monetary policy and quantitative easing program unchanged at its latest meeting, now expects interest rates to rise from 0.1% to 0.2% in 2022 and to 0.5% in August 2024.