US stocks gained in the first notably broad advance since mid-April. The Dow Jones, S&P 500 Index and Nasdaq Composite moved to record intraday highs, but the biggest advance was notched by the small-cap Russell 2000 Index, which gained 6.00%, marking its best week since early November. Value stocks also handily outperformed growth stocks. Q2 earnings season kicked off Friday with releases from JPM, Wells Fargo and Citigroup. The first 2 missed estimates while the latter cut its outlook. A major factor supporting stocks appeared to be Thursday’s release of the US CPI as headline prices fell 0.1% in June, the first decline in 4 years. In the wake of the report, the Russell 2000 Index outperformed the large-cap S&P 500 and the Nasdaq by 209bps and 581bps respectively. Federal funds futures markets are now pricing in the virtual certainty of a rate cut at the Fed’s September meeting. Treasury yields tumbled on the week, led by the short-end, which prompted a dramatic bull steepening and almost un-inversion of the curve (2s30s). The dollar tumbled for the 2nd straight week thanks in large part to USDJPY strength (on the back of BoJ intervention). The STOXX Europe 600 Index ended the week 1.45% higher while Japan’s TOPIX index hit a record high on Thursday. Gold surged back up near record highs, closing the week back above $2400. Crude prices ended the week lower as WTI rejected $83.50. Bitcoin managed gains on the week despite the German government dumping its seized bitcoin holdings.
Have a great week-end
Charles for the team