Weekly Market Recap

Week ended August 10

Market-moving news

Market-moving news

Market-moving news
Midweek momentum shift

After a strong start, U.S. stock indexes changed direction as the week wore on, with the biggest daily decline coming on Friday. Overall, the S&P 500 and the Dow posted small weekly declines, while the NASDAQ was slightly positive after recording its eighth consecutive daily gain on Thursday.

Market-moving news
Turkey trouble

Concerns about Turkey’s economy escalated on Friday, rippling through global currency and equity markets and hitting emerging markets especially hard. The Turkish lira slid more than 13% against the U.S. dollar on Friday, adding to the foreign currency’s losses earlier in the week as the United States expanded trade tariffs on Turkey.  

Market-moving news
Yield watch

Prices of U.S. government debt rallied late in the week, reversing the previous week’s declines. The yield of the 10-year U.S. Treasury bond fell to 2.86%, down from a recent high of 3.00% on August 1.

Market-moving news
Inflation spike

A monthly gauge of inflation posted the biggest monthly increase in a decade, according to a report issued Friday. The core measure of the Consumer Price Index, which excludes volatile food and fuel prices, rose 2.4 % in July relative to the same month a year earlier—the biggest advance since September 2008.

Market-moving news
Tech strength

Information technology stocks were among the biggest gainers of the week, owing in part to the sector’s strong second-quarter earnings. Tech company profits increased an average of 32% compared with the same quarter a year earlier, based on the more than 80% of the tech companies that had reported quarterly data as of August 9. 

Market-moving news
Tuesday rally

Strong earnings reports helped lift stocks on Tuesday to their best result of the week, as the Dow gained nearly 127 points. The S&P 500 climbed to its second-highest closing level ever, just 0.5% shy of its record set in late January of this year.

Currency volatility

While Turkey is a relatively small player in the global economy, the 20% weekly decline in its currency weighed heavily on other emerging-market currencies, potentially increasing borrowing costs for many of those countries. Currencies in South Africa and Hungary dropped around 2% versus the U.S. dollar on Friday, and the Russian ruble fell to its lowest level in two years

 

Small wins

Stocks of smaller companies generally held up better than large caps, as a small-cap benchmark, the Russell 2000 Index, climbed nearly 1% for the week. Most smaller firms are more domestically focused than bigger companies, and they were less exposed to the week’s troubling overseas developments than many larger companies.

The week ahead: August 13–17

Monday

  • No major reports scheduled

 

 

 

Tuesday


  • Export and import prices, U.S. Bureau of Labor Statistics

     

 

 

Wednesday

  • Retail sales, U.S. Census Bureau
  • Business inventories, U.S. Census Bureau
  • Productivity and labor costs, U.S. Bureau of Labor Statistics
  • Industrial production and capacity utilization, U.S. Federal Reserve
  • Housing Market Index, National Association of Home Builders

Thursday

  • Housing starts, U.S. Census Bureau    

Friday

  • The Conference Board Leading Economic Index for the U.S.
  • University of Michigan Index of Consumer Sentiment, preliminary result
Important disclosures

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS).  One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

 

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Investment returns

Equities

U.S. equity size and style total returns (%) as of 8/10/18
1 week
-0.5-0.10.3 Large
-0.6-0.10.7 Mid
0.30.81.3 Small
Value Core Growth
YTD
1.97.312.5 Large
2.15.49.5 Mid
7.710.613.4 Small
Value Core Growth
Index/market total returns as of 8/10/18 (%)
Close Week YTD
Dow Jones Industrial Average 25,313.1 -0.4 3.8
NASDAQ Composite Index 7,839.1 0.4 14.3
S&P 500 Index 2,833.3 -0.2 7.2
MSCI EAFE Index 1,950.8 -1.5 -2.6
Cboe Volatility Index 13.2 13.1 19.2
International/developed (%)
1 week YTD
EAFE -1.5 -2.6
Europe -2.1 -3.1
France -2.4 0.5
Germany -2.7 -7.3
Italy -3.6 -6.0
Japan -0.9 -2.1
Spain -3.1 -7.3
Switzerland -1.3 -1.6
U.K. -1.2 -3.2
Emerging markets (%)
1 week YTD
EM -1.0 -6.5
Brazil -9.0 -12.4
China 2.0 -5.4
India 0.6 -0.8
Indonesia 1.7 -13.3
Korea -0.7 -12.8
Mexico -3.8 1.4
Russia -7.0 -2.6
Taiwan 0.1 4.5
S&P 500 sectors (%)
1 week YTD
S&P 500 Index -0.2 7.2
Consumer discretionary 0.8 15.1
Consumer staples -1.9 -5.3
Energy -0.1 5.8
Financials -0.5 1.1
Healthcare -0.2 9.5
Industrials -0.9 0.0
Information tech 0.4 16.8
Materials -0.9 -1.8
REITs -1.8 1.6
Telecom 0.7 -4.6
Utilities -0.5 2.4

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 8/10/18
1 week
0.10.41.4 Large
0.20.40.2 Mid Quality
0.10.10.6 Small
Value Core Growth
INTEREST RATE SENSITIVITY
YTD
0.8-0.4-3.2 Large
0.3-0.5-4.4 Mid Quality
3.61.5-0.7 Small
Value Core Growth
INTEREST RATE SENSITIVITY
U.S. Treasury bond yields as of 8/10/18 (%)
END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)
2 Yr 2.64 1.88 +76
10 Yr 2.95 2.41 +54
30 Yr 3.09 2.74 +35
2-10 spread 0.31 0.53 -22
10-30 spread 0.14 0.33 -19
U.S. bond sector total returns (%)
1 week YTD
Aggregate 0.4 -1.1
Bank loans 0.1 2.5
Convertible 0.9 7.8
Corporate 0.3 -2.2
High yield 0.1 1.5
MBS 0.4 -0.5
Municipal 0.2 0.0
Preferreds -0.3 -0.1
TIPS 0.5 0.1
Treasury 0.5 -0.9
Global bond total returns (%)
1 week YTD
EM Local -5.0 -11.6
EMD USD -1.3 -4.4
Global Agg -0.1 -2.0
Global Agg Ex-U.S. -0.4 -2.5
Multiverse -0.2 -2.1
Commodities (%)
1 week YTD
BBG Com Ind -0.7 -3.4
Oil (WTI) -1.2 15.3
Gold -0.3 -7.9
Currencies (USD) (%)
1 week YTD
EM FX -0.9 -4.7
AUD -1.1 -6.4
CAD -0.8 -4.2
CHF 0.0 -1.9
EUR -1.4 -4.8
GBP -1.9 -5.6
JPY 0.4 1.7

U.S. economy

GDP

Jobs

Inflation

Ex-U.S.

Regions/countries

Fund industry overview

Total net flows: open-end funds and ETFs ($B) as of 6/30/18

as tracked by Strategic Insight
MONTH 12 Month ASSETS
U.S. equity -16.3 -49.8 7,913.1
Sector equity 0.3 7.8 887.1
Allocation -2.6 29.2 2,757.4
International equity -8.4 184.0 3,159.3
Alternative -2.6 4.6 207.6
Commodities -1.4 6.8 96.7
Taxable bond 18.2 322.4 3,681.4
Municipal bond 2.7 26.6 707.1
Total all long-term funds -11.5 509.3 19,427.9

Leading Morningstar fund categories by monthly net flows ($B) as of 6/30/18

MONTH 12 Month ASSETS
Ultrashort Bond 6.5 53.6 170.2
Foreign Large Blend 5.0 122.4 1,203.7
Intermediate Government 3.3 10.9 133.4
Small Growth 2.8 3.6 261.6
Inflation-Protected Bond 2.8 17.3 153.2

Lagging Morningstar fund categories by monthly net flows ($B) as of 6/30/18

MONTH 12 Month ASSETS
Large Blend -15.2 41.2 3,194.3
Diversified Emerging Mkts -7.6 35.7 532.8
Europe Stock -4.2 -9.4 65.8
Large Value -3.3 -38.5 1,179.4
Large Growth -2.8 -42.9 1,704.5
Important disclosures

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS).  One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

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