Hello, this is Josh Waynick, Senior Investment Strategist at Fifth Third Bank.
Major US Equity indices moved higher this past week, with the S&P 500 posting its best week since early November of 2023.
Specifically, last week the S&P 500 returned 3.9%, the Nasdaq Composite gave investors 5.4%, the Dow Jones Industrial Average returned a 3.0%, and the Russell 2000 posted gains of 3.0%. Looking at debt markets, the US Treasury Yield Curve saw shorter maturities essentially unchanged with longer maturities moving lower over the week. Focusing on the current 2-year/10-year inversion, the US Treasury 10-year yield fell to 3.88% with the US Treasury 2-year yield unchanged at 4.05%. As a result, the 2-year/10-year inversion expanded during the week and ended the week at 17 basis points inverted.
The dollar index, which measures the US Dollar against a basket of global currencies, moved slightly lower during the week and ended the week down by 0.7%. Gold rose by 3.2% over the week and ended the week at $2,508 per ounce. Oil fell by 0.3% and marked the 5th week of lower oil prices out of the last 6 weeks. At the end of Friday, West Texas Intermediate crude oil sat at $76.65 per barrel.
The strong week for equity investors came on the backs of promising inflation and consumer data. This past Tuesday, the Producer Price Inflation came in below expectations and the following day, this past Wednesday, the Consumer Price Index also detailed inflation readings below expectations. Specifically, Consumer Prices detailed inflation readings of 2.9% as compared to last year. The good economic news continued when this past Thursday investors digested retail sales data well above expectations and signaled continued strength for the U.S. consumer. In response to these strong reports, the S&P 500 posted its 3rd and 4th best trading days so far this year and helped drive the strongest weekly returns for the index since November of 2023.
Earnings Season is wrapping up. As of this past Friday around 93% of stocks in the S&P 500 have detailed their financial results. So far, the index is on pace to grow actual earnings at a rate of 8.5% as compared to last year’s second quarter and marks the 4th quarter in a row of actual earnings growth for the index. Looking at results even more granularly, around 70% of the securities that have reported have detailed actual earnings growth.
Looking ahead, fifteen additional stocks in the S&P 500 will detail their financial results this week. On the economic front, this coming Thursday S&P Global will provide updates on their manufacturing and service Purchasing Manager Indices. These surveys help clue investors into potential growth trends and currently markets are expecting the manufacturing reading slightly above last month’s value with the service reading slightly below last month’s value.
That concludes this week’s Economic Beat. As always, we will be watching and reporting back to you next week.
