Global equity markets finished positive for the week. In the U.S., the S&P 500 Index closed the week at 5554, representing an increase of 3.99%, while the Russell Midcap Index gained 3.17% last week. Meanwhile, the Russell 2000 Index, a measure of the nation’s smallest publicly traded firms, returned 2.98% over the week. Developed international equity markets and emerging markets were also positive, returning 4.09% and 2.91%, respectively. Finally, the 10-year U.S. Treasury yield moved lower, closing the week at 3.88%.
As markets pushed forward after the volatile first week of August, investors focused on several economic data points released last week. Both the PPI and the CPI, released on Tuesday and Wednesday, provided an indication of the current state of inflation. The weekly jobless claims monitored the employment market. Most importantly, the retail sales data from July offered insight into the condition of the consumer.
Domestic producer prices increased less than expected in July, as the cost of services fell by the most in nearly 18 months amid signs of diminishing pricing power for businesses, evidence of waning inflation pressures. The report from the Labor Department showed favorable readings for most of the components that go into the calculation of the personal consumption expenditures (PCE) price indexes, the Federal Reserve’s preferred measure of inflation.
The consumer price index rose 2.9% in July from a year ago, the Labor Department reported. That result is down from 3.0% in June and is the lowest level since March 2021. The data demonstrated steady progress in reaching the Fed’s long-term target of 2.0%.
Given investors’ current concern about the employment market, the weekly jobless claims data is more significant. The number of Americans filing new applications for unemployment benefits dropped to a one-month low. The second straight weekly decline erased the increase seen in late July. Many investors viewed the results as evidence that an orderly labor market slowdown remained in place.
The Commerce Department reported retail sales for July on Thursday. Advanced retail sales accelerated 1% for the month, exceeding consensus estimates of 0.3%. Gains in sales were propelled by increases at motor vehicle dealers (3.6%), electronics and appliance stores (1.6%), and food and beverage outlets (0.9%).
Overall, the positive economic data pushed investor sentiment away from the recessionary gloom that dominated markets at the beginning of August.
Best wishes for the week ahead!
PPI, CPI and Jobless claims Data is sourced from The Labor Department. Retail sales data is sourced from The Commerce Department. Economic Calendar Data from Econoday as of 8/16/24. International developed markets are measured by the MSCI EAFE Index, emerging markets are measured by the MSCI EM Index, and U.S. Large Caps are defined by the S&P 500 Index. Sector performance is measured using the GICS methodology.
Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable. You cannot invest directly in an index. Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against a loss.