Weekly Recap | June 20, 2023

June 12-16, 2023 Recap

S&P 500 Posts Fifth Straight Weekly Gain

Nasdaq Climbs Eighth Week
U.S. equities climbed sharply higher last week with the S&P 500 capping a fifth weekly gain, its longest sustained rally since October-November 2021. The week’s main event was the Fed’s June FOMC meeting in which policymakers voted unanimously to leave interest rates unchanged at 5.00%-5.25%. It was the Fed’s first non-intervention on rates in over a year. The policy statement, however, hinted at up to two more rate hikes this year before any rate cuts are considered in 2024.      

For the Week…
The S&P 500 advanced 2.62%, the Dow Jones Industrial Average gained 1.25%, and the tech-heavy Nasdaq Composite surged 3.26%. It was the Nasdaq’s eighth weekly gain. For the year, Russell 1000 large caps have performed best, up 15.57% YTD, led by its Growth component (+27.62%), while its Value-based stocks are up just 4.29%.     

Consumer Sentiment Improves Further
June’s preliminary consumer sentiment index climbed to a four-month high of 63.9, topping projections for a smaller increase to 60.0 from 59.2 in May, according to the University of Michigan. The data reflected improved optimism as inflation eased and the debt crisis was averted. Consumer sentiment is now 28% above its historic low a year ago.

Weekly Sector Insights
All but one of the S&P 500’s 11 major sectors posted gains last week, led by Technology (+4.45%), Materials (+3.36%), and Consumer Discretionary (+3.16%). Utilities (+1.35%) and Financials (+1.23%) rose the least, while Energy (-0.67%) was the sole decliner. Technology remains this year’s top-performing sector, up 41.57% YTD.

Treasury Yields Inched Higher
The yield on benchmark 10-year Treasury notes ended Friday at 3.777%, up just 0.037% for the week. On Wednesday, Fed Chairman Powell will begin delivering his semiannual testimony to the House Financial Services Committee. Then on Thursday, he is in front of the Senate Banking Committee.

The Latest from @CeteraIM

Bearishness at Nearly Two-Year Low

July Rate Hike is Probable

Stocks are In Overbought Territory  

Economic Calendar

Monday, June 19
Juneteenth Day holiday, All Markets Closed.

Tuesday, June 20
Housing Starts/Building Permits.

Wednesday, June 21
Mortgage Activity, Fed Chairman Powell House Testimony.

Thursday, June 22
Jobless Claims, Current Account, Existing Home Sales, Powell Senate Testimony, Leading Economic Indicators.

Friday, June 23
S&P Global U.S. Services/Mfg PMIs.

Core Consumer Price Index (CPI) inflation remains stubbornly high at 5.3% year-over-year, although it has slowed from a peak of 6.6% last year. Core CPI excludes food and energy. We are seeing more progress with headline CPI, which is up 4.1% year-over-year, having eased from a peak of 9.1% last year. The trend looks encouraging based on the last six months annualized (+3.2%) and the last three months annualized (+2.2%).

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^Glossary

^{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.}