Weekly Market Recap: Tech-Driven Highs, Mixed Global Markets, and Rising Bond Yields
Market Overview
U.S. equity indexes reached new highs early in the week, driven by big tech, but experienced a downturn in the last two sessions. The S&P 500 recorded its 31st record close of the year on Tuesday and ended the week with a 0.6% gain. The Nasdaq remained flat, while the Dow increased by 1.5%. Value stocks outperformed growth stocks, with the Russell 1000 Growth vs. Value indexes showing this trend, and the Russell 2000 Index rose by 0.5%.
The technology sector was a significant driver of market movement, with Apple, Microsoft, and NVIDIA vying for the title of the world’s largest company, all hovering around the $3 trillion mark. However, tech momentum waned mid-week due to corporate buyback blackouts and other factors. European markets recovered slightly amid French political concerns, with the STOXX 600 gaining 0.8%. Asian markets were mixed, with gains in Hong Kong and Taiwan, while Japan and China saw declines. India’s Sensex and Nifty 50 reached record highs mid-week but had minor drops on Friday.
Federal Reserve Insights and Economic Roundup
The Bloomberg Aggregate Index dropped as bond yields rose amid volatile market conditions. Economic data was mixed, with weaker retail sales but stronger PMI data on Friday. The U.S. high yield issuer-weighted default rate fell slightly, though the debt-weighted default rate remained flat. Corporate credit saw significant new debt issuance in May, with mixed rating momentum across investment-grade and high-yield bonds.
In commodities, the Bloomberg Commodity Index failed to hold gains, with WTI crude futures up by 2.6% due to lower stockpiles. Gold saw a decline after PMI data, despite recent strength from central bank buying and ETF demand. The dollar strengthened against peers, influenced by European political uncertainties and the Bank of Japan's decision to maintain its current policy.
Consumer spending showed signs of cooling, with retail sales rising by just 0.1% in May and significant declines in furniture sales and restaurant spending. Residential construction also slowed, with housing starts at their lowest pace since June 2020.
The Week Ahead
Upcoming economic data includes:
Monday: Bloomberg June U.S. Economic Survey, Dallas Fed Manufacturing Activity (June)
Tuesday: Philadelphia Fed Non-manufacturing Activity (June), Chicago Fed National Activity Index (May), FHFA House Price Index (April), CoreLogic US House Price Index (April), CoreLogic 20-city Composite Index (April), Conference Board Consumer Confidence (June), Richmond Fed Manufacturing Index (June), Richmond Fed Business Conditions (June), Dallas Fed Services Activity (June)
Wednesday: MBA Mortgage Applications (June 21), New Home Sales (May)
Thursday: GDP Price Index (1Q), Wholesale Inventories (May), Personal Consumption (1Q), Core PCE Price Index (1Q), Initial Jobless Claims (June 22), Continuing Claims (June 15), Durable Goods Orders (May), Capital Goods New Orders Nondefense ex Aircraft (May), Capital Goods Shipments Nondefense ex Aircraft (May), Advance Goods Trade Balance (May), Retail Inventories (May), Pending Home Sales (May), Kansas City Fed Manufacturing Activity (June)
Friday: Personal Income (May), Personal Spending (May), Real Personal Spending (May), PCE Deflator (May), PCE Core Deflator (May), MNI Chicago PMI (June), University of Michigan Sentiment (June), Kansas City Fed Services Activity (June)