Heritage Insider Weekly | July 27th, 2021

Heritage Financial Advisory

The major markets returned to its record setting ways as the domestic markets closed higher once again last week. The Nasdaq, Dow Jones, S&P 500, and even the MSCI World Index saw new all-time highs by the end of the week. This left the Emerging Market index as the notable exception sitting in negative territory for the week and almost flat on the year.

The turnabout was surprising given how the week began. The S&P 500 closed with a loss over 1.5% on Monday. This marked the largest daily loss since May. However, the turnabout was quick with every other day last week closing higher.

The gains were fairly consistent as only Utilities and Energy closed lower. Communication Services led the pack with the gain of three and a quarter percent. This was followed closely by Consumer Discretionary and Information Technology.

But the gains were not limited to the equity markets. Bonds managed to add to the positive performance with gains in the Bloomberg Barclays US Aggregate Bond Index. This takes the Year-to-Date return to a slight loss of three quarters of a percent.

In Economic News, Thursday’s Weekly Initial Jobless Claims rose unexpectedly to 419,000 after testing a post-pandemic era low of 368,000 the prior week. Digging deeper, we see that according to the Department of Labor, the Total Continued Claimed Filed for UI Benefits in All Programs dropped by over 1.26 million as of July 3rd.
As the Wall Street Journal recently highlighted, a number of states have opted to cut benefits prior to the September federal expiration which have consequently seen drops in their respective state’s unemployment rolls. Yet, the timing of the end of the unemployment benefits has been seen as political. In both Indiana and Maryland, judges have issued temporary injunctions to block the termination of the additional unemployment benefits.

This week, the markets will be looking at a number of housing related reports early in the week followed by the midweek FOMC Meeting which will conclude with a Press conference by Fed Chair Jerome Powell. Finally, the week will end with the release of the Core Inflation report and the University of Michigan Consumer Sentiment Index.