The S&P 500 is up 16% YTD, with the benchmark recording its 4th positive week in the last five as investors bet that any economic weakness later this year will be met with a Fed rate cut. The Nasdaq’s YTD gain is 22%. As measured by Russell 1000 indexes, growth shares outperformed value stocks by 415 basis points over the week, while small & mid caps recorded losses. Expectations for lower interest rates, fed by signs of weakening growth and easing inflation pressures, seemed to remain a major factor in favouring growth stocks. On Monday, the ISM posted its lowest reading of manufacturing activity (48.5) since February. More surprising may have been a sharp downturn in the ISM’s current services sector activity, which plunged from 53.8 in May to 48.8 in June. The closely watched official jobs report from the Labor Department, released Friday, confirmed a slowdown in US job growth, with June job gains falling 12,000 to 206,000, although the drop was smaller than consensus expectations. Some dovish comments by Fed Chairman Powell’s and the week’s economic data appeared to drive a decline in long-term U.S. Treasury yields over the week. In Europe, the STOXX Europe 600 Index ended 1% higher. In France, the far right failed to win an outright majority in the 1st round of legislative elections on June 30. Meanwhile, the Labour Party won the UK general election on July 4 with a large majority. The dollar dropped, gold surged while cryptos crashed as bitcoin entered bear market territory.
Have a great week-end
Charles for the team