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- Stocks were mostly positive last week. We saw global markets (represented by the MSCI All Country World Index) up 1.1% and domestic stocks (represented by the S&P 500 Index) up 2.0%. We saw emerging markets (represented by the MSCI Emerging Markets Index) post a drop of -2.1%.
- The initial part of the week was highlighted by rising market volatility as the delta variant of COVID-19 continues to spread globally. Despite that, major stock indexes ended up positive for the week.
- The combination of delta variant concerns along with easing inflation/growth expectations pushed bond yields lower. The 10-year Treasury dropped to under 1.2% at points last week, indicating that investors were buying up low-yielding government debt.
- For much of the year, we’ve spoken about cyclical value sectors driving returns, such as energy, real estate and financials. The market has rotated over the last few months and we now see growth stocks performing in line with value stocks on a year-to-date basis. Through Friday, the communication services sector (which contains Alphabet/Google, Facebook, and Netflix) is now up over 25% and technology is up about 19%. Concerns over economic growth and a reduction in bond yields are contributing factors.
- As has been the case for about a year now, all eyes and ears will on the two-day Federal Reserve meeting this week. All expectations point to them keeping rates unchanged, but the focus will be on their rhetoric and any changes in their stance, given current conditions.
- The U.S. Bureau of Economic Analysis will release its first estimate of GDP growth on Thursday.
- I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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