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Weekly Recap | July 11, 2022

Weekly Recap | July 11, 2022

July 14, 2022
Weekly Recap

July 4-8, 2022 Recap

Stocks Rebound

Upbeat Sentiment at Second Half Start
U.S. equity markets finished the holiday-shortened week positive with the S&P 500 recouping most of its prior week’s losses after a stronger-than-expected June payrolls report provided a sense of relief on the labor front. While good for the economy, the continued strength in hiring will likely keep Fed policymakers on track for further aggressive rate hikes in the coming months.

For the Week…
The S&P 500 rebounded by 1.98%, after falling 2.18% the week prior. The Dow Jones Industrial Average fell 0.77% while the tech-heavy Nasdaq Composite jumped 4.58%. The leading Nasdaq index capped its first five-day rally of the year. The broader equity indices got off to a good second-half start after suffering the worst first-half start to a year in 52 years.

June Payrolls Stay Strong
U.S. nonfarm payrolls increased by 372,000 in June, outpacing economists’ consensus forecast for a much larger slowdown to 250,000 from May hiring of 384,000. The unemployment rate held steady at 3.6%, which is just slightly above the pre-pandemic low.  Positively, the private sector has now recovered all 21 million jobs it had lost in the first two months of the pandemic.

Communication Services Outperform
Despite a winning week, six of the S&P 500’s 11 major sector groups posted declines last week led by profit-taking in Utilities (-2.83%), Energy (-2.39%) and Materials (-1.48%). Gainers were led by Communication Services (+5.12%), Consumer Discretionary (+4.56%) and Technology (+4.35%). Energy (+30.55%) is still this year’s top-performing sector.

Treasury Yields Rise
Treasury bond yields advanced last week with the 10-year Treasury ending Friday at 3.096% after dropping to 2.88%. This was another large move in Treasury yields. The U.S. Dollar Index strengthened, climbing 1.78% last week, extending this year’s gain to nearly 12%.

The Latest from @CeteraIM

Wage Inflation Eases

No Sign of Recession in Labor Markets

Worst First Half Performance since 1970

Economic Calendar

Monday, July 11
No Major Releases.

Tuesday, July 12
Small Business Optimism.

Wednesday, July 13
Mortgage Activity, Consumer Prices, Fed Beige Book.

Thursday, July 14
Jobless Claims, Producer Prices.

Friday, July 15
Empire State Manufacturing, Retail Sales Advance, Import/Export Prices, Business Inventories, Consumer Sentiment.

The auto sector is still dealing with inventory issues, but other retail sectors have been able build inventory levels. Retail inventories (ex. Autos) have increased by 19.8% over the last year, as of April. While the inventories/sales ratio has risen to the highest level since May 2020, it is still below pre-pandemic levels, though that gap is closing.

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.

The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.

The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.

The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.