Market Data as of Week Ending: 8/20/2021 unless noted otherwise
U.S. stock prices pulled back last week as markets experienced their worst week in over two months. Concerns surrounding the Delta variant, Fed tapering, and growing geopolitical issues weighed on investors’ minds. The most recent Fed minutes revealed an increasing likelihood that it may advance its taper timeline, stripping the market of the perceived safety net. Large cap companies outperformed their small and mid cap peers while growth stocks held up better than their value counterparts. The indices were weighed down by economically sensitive sectors such as energy, materials, and financials. Health care, information technology and consumer staples appeared more resilient as they posted gains for the week. Developed foreign stocks in Europe and Asia trailed U.S. stocks while Emerging Market stocks significantly underperformed both developed foreign and U.S. markets.
U.S. Treasury yields fell slightly despite the Fed’s taper talk. The 10-year ended the week at 1.26%. Long-term government bonds were the best performing segment for the second week in a row while long-term high yield 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 4.8%.
It was a relatively light and mixed week on the economic front. Americans reduced their spending in July as retail sales slumped -1.1% for the month, largely reflecting the decline in car-buying. U.S. industrial production rose by 0.9% in July, its fastest pace since March. Home-builder confidence sank to its lowest level in over a year as the NAHB home builder’s confidence index fell five points to 75 in August. Jobless claims fell to a pandemic low of 348,000 in mid-August, showing that companies are still hiring despite the delta variant. The Philly Fed manufacturing index fell slightly to 19.4 in August, marking the fourth consecutive monthly decline. Heavy flooding and COVID-19 outbreaks across China weighed on the countries retail sales and consumer services, as many monthly economic indicators missed expectations in July.