Weekly Market Commentary

Global equity markets fell last week as investors digested a full dose of Q2 earnings reports, a packed economic calendar, more central bank policy decisions, and Fitch’s surprise downgrade of US sovereign debt.

Q2 earnings continued to generally surprise to the upside.  Almost 85% of the S&P 500 companies have reported their results.  For the week, behemoths Apple and Amazon reported.  Amazon reported a great quarter, especially in its cloud services division.  The company gained 8.3% after the report, propelling the consumer discretionary sector higher.   On the other hand, Apple’s report disappointed the street.  Lackluster sales of iPhones and concern about the future growth of hardware pressured the stock. Apple fell 4.8% after their report.  Caterpillar announced a solid quarter, noting that some of its supply chains have normalized.

The economic calendar was equally as busy as the earnings calendar.  On Friday, the Employment Situation report showed an increase of 187k Non-Farm payrolls, less than the expected 200k and well below the figures we have seen in the post-COVID economy.  It’s worth reminding ourselves that this is still a strong report and continues to show a resilient labor market.  Private Payrolls increased by 172k as the Unemployment rate ticked to 3.5% from 3.6%.  Average hourly earnings ticked higher by 0.4%; the street consensus estimate was for a gain of 0.3%.  The Average hourly work week fell by 0.1% to 34.3.  Initial claims for the week came in at 227k while continuing claims increased to 1700k.  ISM Manufacturing continued to show contraction while services declined but remained in expansion mode.  A preliminary look at Q2 productivity showed an impressive increase of 3.7% as Unit Labor Costs increased by 1.6%, less than the consensus estimate of 3%.

The downgrade of the US Sovereign by Fitch was an interesting call and opens the door for further sovereign debt downgrades.  The downgrade from AAA to AA+ was based on “fiscal deterioration,” where large amounts of debt continue to mount while budget governance has become a political stalemate.

The S&P 500 shed 2.3%, the Dow gave back 1.1%, the NASDAQ fell by 2.8%, and the Russell 2000 sold off by 1.2%.   US Treasury action was mixed across the curve and, for the first time in a long time, produced a steepening of the yield curve.  The 2-10 spread declined from over 100 to 72 basis points.  The 2-year yield fell by twelve basis points to 4.78%, while the 10-year yield increased by nine basis points.  Fitch’s downgrade, coupled with better the expected economic data, helped push the curve’s longer end higher.  Oil prices increased by $2.24 to close at $82.78.  Gold prices advanced by $16.70 to $1977 an Oz.  Copper prices fell by $0.04 to 3.86 a lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Share:

View the Latest Commentaries:

Weekly Market Commentary

Markets finished the week mixed as interest rates increased across the yield curve.  Oil prices swung significantly during the week as reports suggested the US and Iran were close to a deal to reopen the Strait of Hormuz.  This weekend, President Trump rejected the proposed deal, with reports suggesting the US will resume more aggressive military operations after the Midterms.  This is likely to send oil prices higher on Monday and, with it, increase inflation expectations.  President Trump’s meeting with Chinese leader Xi offered little change to the current political stance.  The two countries delayed increasing tariffs until January 2027, and the two leaders are scheduled to meet two more times before year-end.   Additionally, the two leaders appear to be on the same page on AI development and pushed back on slowing it but agreed that safeguards should be put in place.  Debate continues over AI development and its safeguards. 

Weekly Market Commentary

It was a volatile week on Wall Street as traders assessed monetary policy decisions from several central banks, including the Federal Reserve.  The Fed did, as expected, raise its policy rate by 25 basis points to 3.75%-4.00%, but Fed Chairman Warsh’s very hawkish tone increased the likelihood of three more rate hikes starting later this year and in the first half of 2027.  The Fed Chair offered no forward guidance but did provide the dot plot from the other committee members.  The yield curve flattened on the announcement, with the front end of the curve selling off more than longer-duration Treasuries. Notably, the Bank of England kept its policy rate in place while the Bank of Japan raised its policy rate by 25 basis points.  A more dovish signal from the BOJ’s president sent the Yen lower.  Bottom line: the US economy is strong, employment looks stable, and inflation remains

Weekly Market Commentary

US equity markets fell in the holiday-shortened week as oil prices surpassed $100 a barrel, raising inflation concerns and pushing interest rates higher.  Additionally, elevated inflation data announced during the week increased the likelihood that the Federal Reserve would raise its policy rate by 25 basis points.  Several Gulf nations announced Friday that they would meet with Iranian officials this weekend to ease tensions, and on Sunday Tehran announced it would decide whether to open part of the Strait of Hormuz, but details of the opening were limited.  This followed Saudi Arabia’s announcement that it had shut down the oil pipeline used to circumvent the Strait. The S&P 500 fell 0.78%, the Dow gave back 1.56%, the NASDAQ declined 0.64%, and the Russell 2000 decreased by 2.39%.  US Treasuries suffered losses across the curve, with the front end of the curve getting hit hardest.  The 2-year yield increased by twenty-six

Weekly Market Commentary

Markets finished the week mixed as investors assessed the escalation of tensions between the US and Iran and recalibrated expectations of Federal Reserve monetary policy.  The week started with sharp declines after the US hit targets on an island in the Strait of Hormuz that were ready to launch mines into the strait.  Iran then countered with drone attacks on Jordan and the UAE.  On Saturday, there were reports that the US had hit three Iranian cargo ships after Iran fired ballistic missiles at two US Navy ships.  The news sent oil prices higher, which in turn raised inflation concerns.   Markets settled down mid-week after Dell reported a solid quarter and after dovish comments made by Fed Bank of New York President John Williams.  Markets moved higher on Thursday after Fed Governor Waller said he would be willing to hold rates steady if price pressures continue to ease and noted