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Weekly Recap | July 3, 2023

Weekly Recap | July 3, 2023

July 06, 2023
Weekly Recap

June 26-30, 2023 Recap

S&P 500 Returns to Positive Weekly Performance

Economic Optimism Trumps Rate Concerns
The S&P 500 more than fully erased its 1.37% prior weekly loss following renewed economic optimism stemming, in part, from an upward revision to first-quarter GDP. Moreover, May durable goods orders posted an unexpected increase, consumer confidence continued to improve, and initial jobless claims declined the most in 20 months. Lastly, Friday’s reading of headline PCE prices cooled to 3.8% year-over-year in May, the lowest since April 2021. Gains for the week were essentially underpinned by signs for a healthier economy which outweighed concerns about higher-for-longer interest rates.

For the Week…
The S&P 500 advanced 2.36%, the Dow Jones Industrial Average gained 2.02%, and the tech-heavy Nasdaq Composite rebounded 2.20%. Mid caps (+3.90%) and small caps (+3.75%) outperformed large caps (+2.51%) last week, according to Russell indices.

GDP Upwardly Revised
The economy expanded more strongly than the expected growth in the first quarter. U.S. GDP increased at a 2.0% annualized pace in the first three months of the year, up from a prior estimate of 1.3%. While down from 2.6% growth in the 4Q 2022, the upward revision broadly undercuts prior expectations that the U.S. is heading for a near-term recession. The revision was largely due to increased personal consumer expenditures (+4.6%) and exports were stronger than previously thought (+7.8%).

Weekly Sector Insights
All 11 S&P 500 major sector groups ended positive last week, with Real Estate (+5.14%) and Energy (+4.82%) gaining the most. Those same two sectors had fallen the most the week prior, down respectively 3.96% and 3.45%. Technology gained 2.93% while Consumer Staples (+0.58%), Healthcare (+0.58%), and Communication Services (+0.37%) rose the least.

Treasury Yields Edge Higher
The yield on benchmark 10-year Treasury notes ended Friday at
3.81%, rebounding nearly 0.07% from the week prior. The Federal Reserve announced that all systemically important banks passed their 2023 annual stress tests under hypothetical severe recession conditions.

The Latest from @CeteraIM

NBER Recession Monitoring

Rent Price Growth Slows to 0% from a Year Ago   

Home Prices Rebound Third Straight Month  

Economic Calendar

Monday, July 3
All Markets Close Early, ISM Manufacturing, Construction Spending.

Tuesday, July 4
Independence Day holiday, All Markets Closed.

Wednesday, July 5
Mortgage Activity, ADP Private Sector Jobs, Factory Orders, FOMC Meeting Minutes.

Thursday, July 6
Jobless Claims, U.S. Trade Deficit, ISM Services.

Friday, July 7
Nonfarm Payrolls, Unemployment Rate, Hourly Wages.

Consumer confidence increased more than expected in June and reached a 17-month high according to the Conference Board. Consumers are feeling more confident about current conditions and have a slightly less pessimistic view of recession risks, but consumer expectations are still not at rosy levels. With that said, the stock market is up, housing prices are showing signs of stabilization, inflation is moderating, and unemployment is still low. That’s a recipe for rising consumer sentiment.

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.