Hello and welcome to this week’s Jones Financial Blog! Our goal at Jones & Associates is to help keep you up to date with interesting current economic/market happenings as well as some proprietary portfolio happenings. Knowledge is power and thought we would share some of ours with you. Enjoy!
All data is for the week ended July 16, 2021
All major US equity indices were down last week, with the benchmark S&P 500 declining 0.96%, the Russell 2000 dropping 5.11% and the NASDAQ off 1.87%. Mid- and small-caps were significantly weaker than large caps. Overseas, the developed markets (MSCI EAFE) edged down 0.46% while the emerging markets (MSCI EM) rose 1.72%. Within the US, energy was the largest declining sector while utilities and consumer staples were the best performers. (1)
Interest rates dropped last week and values rose for intermediate and longer term bonds, with the benchmark 10-year treasury yield declining 6 basis points to 1.31%. (2) The Federal Reserve’s chair spoke to Congress last week, sustaining his position that recent high inflation should prove to be transitory. See Economic Data below. Additionally, the interest rate decline may be attributed to concerns for economic growth to slow due to the surge in covid cases among the unvaccinated.
Gold prices managed to end the week higher for a fourth week in a row. For the week, the price of gold rose 0.22% to $1,892.20 per troy ounce as investor concerns for continued high inflation grew despite the Fed chairman’s statements. (3)
West Texas crude ended the week at $71.56 per barrel, down 4.0% for the largest weekly drop since March (4), pressured by the possibility of more crude supplies on the global market and risks to the demand outlook. The United Arab Emirates and Saudi Arabia reached a compromise on Sunday that would allow OPEC+ to further relax production curbs beginning next month, contributing to oil’s price loss this week. (5)
Inflation was higher than expected in June, rising 5.4% over the past year, the fastest pace in 12 years. The cost of used cars accounted for more than one-third of the increase, but prices for food, energy, clothing, plane tickets and shelter also rose sharply. Excluding volatile food and energy, “core” inflation rose 4.5% over the past year. (6) Producer prices also rose faster than expected, growing 1.0% in June vs. consensus of 0.6%. (7)
The New York state manufacturing index jumped 25.6 points to 43.0 in July, a new record high and far in excess of expectations. (8)
June’s retail sales were surprisingly strong, increasing 1.1% from May (excluding autos and gas) which had been down 1.7% from the prior month. Department stores showed the strongest growth, rising 5.9% month over month. (9)
China’s economic growth rate slowed to 1.3% on a quarter-over-quarter basis, a larger drop than expected and up 7.9% on a year over year basis. It was a sharp slowdown after year-on-year growth of 18.3% in the first quarter due to easy comparisons a year earlier due /to Covid. (10)
Proprietary portfolio happenings:
Company News (11)
NextEra Energy Inc. (NEE), a Core Select and G50 holding, benefitted from the shift toward the defensive utilities last week as the sector rose 2.6%1 and this Florida-based electric utility’s stock grew 3.90% last week.
Visa Inc. (V), a Core Select and G33 holding, rose 4.05% last week as reports of increasing credit card volume growth from JP Morgan, a leader in credit card issuance, is expected to benefit this payments technology firm. (12)
Did You Know? Ten thousand light years from Earth, there is a huge cloud of alcohol (Sagittarius B). It is 1,000 times larger than the diameter of our solar system and contains enough alcohol to fill 400 trillion pints. To drink all of it, everyone on Earth would have to drink 300,000 pints per day for 1 billion years.
(2) US Treasury
(11) All weekly changes in company stock prices: Yahoo Finance