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The Markets – July 22, 2024

IN THE MARKETS
The major indexes ended mixed during a week marked by a continued rotation in market leadership toward small-cap and value shares. The week also saw a widespread global disruption to computer systems early Friday due to an error in a vendor’s security update for some users of the Microsoft operating system, though this had little impact on U.S. trading. A significant factor in the underperformance of growth stocks was a sharp decline in chip stocks on Wednesday, following news that the Biden administration was considering severe export curbs if companies like Tokyo Electron and ASML Holding continued providing China with access to advanced semiconductor technology. Consequently, chip giants Taiwan Semiconductor Manufacturing, Broadcom, and NVIDIA also fell sharply. Traders noted that polls indicating an increasing likelihood of a Republican sweep in the November elections appeared to favor value stocks, with the prospect of lighter banking regulation boosting the financial sector and higher tariffs under a potential Trump administration benefiting industrials and business services shares.
U.S. MARKETS
DOW & TECH
The Dow showed a gain this week, ending the week up 0.72% to end at 40,287.53 vs the prior week of 40,000.90
The tech-driven Nasdaq showed losses this week. NASDAQ was down 3.65% by closing this week, ending at 17,726.94 vs. the prior week of 18,398.45.
BY MARKET CAP
  • Large-Cap: The S&P 500 was in the red this week. It was down 1.97%, closing at 5505.00 compared to last week’s 5615.35.
  • Mid-Cap: The S&P 400 mid-cap was in the red this week, down 0.18%. It went from last week’s close of 3020.71 to 3015.30.
  • Small-Cap: The Russel 2000 was up 1.68% for the week, closing at 2184.35 compared to last week’s 2148.27.
COMMODITIES / FUTURES
Commodities were down this week, showing poor performance.
THE VOLATILITY INDEX for 2024 (VIX)
VIX closed at 16.52 this week, a 32.58% increase vs last week’s close of 12.46.
INTERNATIONAL MARKETS
U.S. MARKET NEWS
Inflation and Labor in Better Balance
Fed Chair Jerome Powell addressed the central bank’s dual mandate on Monday, stating, “Now that inflation has come down and the labor market has indeed cooled off, we’re going to be looking at both mandates. They’re in much better balance.” The yield on the benchmark 10-year U.S. Treasury note fell alongside inflation concerns for most of the week before spiking Friday due to worries over the Microsoft disruptions. (Bond prices and yields move in opposite directions.) According to our traders, the municipal bond market absorbed a large primary calendar, which was particularly busy for the summer months, though the issuance softened the rate-driven rally on Tuesday. The level of issuance in the investment-grade corporate bond market surpassed expectations for the week, with most sectors closing with spreads unchanged to slightly tighter. High yield bonds traded higher amid a stronger macro backdrop as rates rallied due to the increased likelihood of Fed rate cuts sooner than December. After a slow start, trade volumes increased as demand strengthened, though issuance remained subdued throughout the week.
INTERNATIONAL MARKET NEWS
EUROPE
In local currency terms, the pan-European STOXX Europe 600 Index ended 2.68% lower amid rising trade tensions between the U.S. and China. Among major Continental indexes, Germany’s DAX dropped 3.07%, France’s CAC 40 lost 2.45%, and Italy’s FTSE MIB declined 1.05%. The UK’s FTSE 100 fell 1.18%. The European Central Bank (ECB) kept its key interest rates unchanged at 3.75%, stating it would not commit to any rate path and emphasizing that economic data would guide its decisions. ECB President Christine Lagarde indicated that a September move was “wide open,” noting that risks to economic growth were “tilted to the downside” and that inflation would remain at current levels before declining in the second half of 2025. The ECB’s Bank Lending Survey for the three months through June showed household loan demand expanded for the first time in two years, driven by easier mortgage conditions and optimism about the housing market. However, industrial production in the euro area fell 0.6% in May, the first decline since January, with a 2.9% year-over-year drop and steep falls in Germany, Italy, and France. In the UK, headline annual inflation held steady at 2% in June due to a significant decline in energy costs, while core inflation remained at 3.5% and services inflation at 5.7%. Average earnings, excluding bonuses, grew by an annual 5.7% in the three months to May, down from 6.0% in April, but still nearly double the Bank of England’s 2% inflation target, sparking doubts about an August rate cut.
JAPAN
Japan’s stock markets declined over the week, with the Nikkei 225 Index falling 2.7% and the broader TOPIX Index down 1.2%, primarily due to concerns about tighter U.S. restrictions on exporters of advanced semiconductor technology to China, affecting several Japanese chip makers. Speculation about the Bank of Japan (BoJ) potentially hiking interest rates at its July 30–31 meeting and detailing the tapering of its massive bond purchases caused the yield on the 10-year Japanese government bond to fall to 1.04% from 1.06% the previous week. The yen strengthened to around JPY 157.37 against the USD from the previous week’s 157.91, marking its second successive weekly gain following suspected government yen-buying operations. Japan’s top currency official, Masato Kanda, hinted at a response to excessive foreign exchange moves by speculators, though authorities usually do not confirm currency interventions immediately. Economic data revealed that the nationwide core consumer price index (CPI) rose 2.6% year-on-year (y/y) in June, slightly below the consensus estimate of 2.7% y/y, while the overall inflation rate remained steady at 2.8% y/y. Highlighting Japan’s economic fragility, the government lowered its GDP growth forecast for the fiscal year ending March 2025 to 0.9%, down from the 1.3% projected in January, due to sluggish domestic consumption and rising import costs from yen weakness. For the fiscal year beginning April 2025, the government expects demand-led growth of 1.2%.
CHINA
Chinese equities rose as investor sentiment remained largely unaffected by weaker-than-expected economic growth in the second quarter. The Shanghai Composite Index increased by 0.37%, and the blue-chip CSI 300 gained 1.92%. In contrast, Hong Kong’s benchmark Hang Seng Index declined by 4.79%, according to FactSet. China’s gross domestic product expanded by a below-consensus 4.7% year-on-year in the second quarter, down from 5.3% in the first quarter. Quarterly, the economy grew 0.7%, less than half of the first quarter’s revised 1.5% expansion. Other data highlighted economic weakness: retail sales grew by 2% in June, down from 3.7% in May, partly due to lower sales of autos and household appliances. Industrial production rose by a better-than-expected 5.3% in June year-on-year but slowed from May’s 5.6% increase. Fixed asset investment grew 3.9% in the January-to-June period year-on-year, in line with forecasts, though property investment fell 10.1%. The urban unemployment rate remained steady at 5%, while the youth jobless rate dropped to 13.2%, the lowest level since December.
HIGHLIGHTED STORY
The Biggest ETF in Every Sector

https://posts.voronoiapp.com/markets/The-Largest-Sector-focused-ETFs-by-AUM-1757

July 15th, 2024

What We’re Showing
This graphic lists the largest ETF, by assets under management (AUM), across the 11 major stock sectors. All data comes from VettaFi’s ETF database and is as of July 9, 2024.
Key Takeaways
  • Invesco’s QQQ is the largest tech-focused ETF by a significant margin, and the fifth largest ETF traded in the U.S. overall
  • Select Sector SPDRs is a prominent manager for other sector-focused ETFs
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Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Camarda Wealth Advisory Group -“CWAG”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from CWAG.  Please remember that if you are a CWAG client, it remains your responsibility to advise CWAG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CWAG is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of CWAG’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: CWAG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to CWAG’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

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