Weekly Market Recap

Week ended July 12

Market-moving news

Market-moving news

Market-moving news
Hat trick

Major indexes rallied to new highs, with all three setting records during the week. The Dow Jones ended the week at 27,332, up 1.5%. The S&P 500 hit 3,013, while the NASDAQ topped 8,244—a bump-up of around 1.0% for each index.

Market-moving news
Rate watch

In two days of testimony on Capitol Hill, Fed Chairman Jerome Powell signaled a pending interest rate cut, citing trade tensions and concerns around the U.S. and global economies as contributing factors. Stocks surged on the prospect of the first rate cut since 2009.

Market-moving news
Healthcare heats up

The Trump administration’s about-face decision to leave drug rebates for government plans in place helped push the Dow past the 27,000 mark. Healthcare companies rose by as much as 9.5% in intraday trading on Thursday. 

Market-moving news
Trade back on track

U.S.-China trade talks appeared set to resume after the countries’ presidents reached a go-ahead agreement. However, China’s late-week edict to impose new sanctions on the United States could slow progress.

Market-moving news
Oil rumble

A storm in the Gulf of Mexico, declines in U.S. crude oil inventory, and a softer stance from the Fed combined to drive the prices of oil futures to over $60 a barrel, the highest point since May. OPEC has cut its 2020 oil-production forecast, citing slowing global demand, among other factors.

Market-moving news
Mind the gap

The inversion of the yield curve, the spread between the 3-month and 10-year U.S. Treasuries, has lasted more than 6 weeks. The New York Federal Reserve’s probability model for predicting a U.S. recession over the next 12 months—which uses the metric as a key input—reached a 32.9% probability in June, above the 30.0% threshold.

Market-moving news
Prices rise

In June, the Consumer Price Index unexpectedly climbed 0.1% from the prior month, and 1.6% compared with the same month a year ago. Core prices—which include basic consumer staples but exclude food and energy categories—were up 0.3% from May, the largest increase since January 2018.

Market-moving news
Eyes on earnings

Corporate earnings could dampen stock market euphoria, as 77% of the companies that have issued second-quarter forecasts projected negative earnings per share growth. Analysts now expect earnings to decline by 2.9% versus a year ago, as slower growth and the cost of tariffs on U.S. businesses are tallied.

The week ahead: July 15-19

Monday

  • No major reports scheduled    

Tuesday

  • Retail sales, business inventories, export and import prices, U.S. Bureau of Labor Statistics 
  • Manufacturing and trade: inventories and sales, U.S. Census Bureau    

Wednesday

  • Housing starts, U.S. Census Bureau

 

Thursday

  • The Conference Board Leading Economic Index for the U.S.    

Friday

  • University of Michigan Index of Consumer Sentiment    
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 7/12/19
1 week
0.40.81.2 Large
0.10.51.2 Mid
-0.6-0.3-0.1 Small
Value Core Growth
YTD
18.321.925.5 Large
19.723.829.8 Mid
13.417.321.0 Small
Value Core Growth
Index/market total returns as of 7/12/19 (%)
Close Week YTD
Dow Jones Industrial Average 27,332.0 1.5 18.7
NASDAQ Composite Index 8,244.1 1.0 25.0
S&P 500 Index 3,013.8 0.8 21.5
MSCI EAFE Index 1,921.5 -0.5 14.5
Cboe Volatility Index 12.4 -6.8 -51.2
International/developed (%)
1 week YTD
EAFE -0.5 14.5
Europe -0.6 15.6
France -0.1 18.2
Germany -1.7 13.3
Italy 1.1 22.7
Japan -0.4 9.3
Spain -0.1 10.6
Switzerland -1.3 21.1
U.K. -0.2 12.6
Emerging markets (%)
1 week YTD
EM -0.7 10.7
Brazil 2.0 22.1
China -1.9 12.5
India -2.3 5.9
Indonesia 0.7 9.8
Korea -1.3 0.2
Mexico -1.4 7.0
Russia -0.8 32.7
Taiwan 1.2 12.7
S&P 500 sectors (%)
1 week YTD
S&P 500 Index 0.8 21.5
Communication services 1.4 24.2
Consumer discretionary 2.2 27.0
Consumer staples 0.9 19.8
Energy 2.2 14.5
Financials 0.5 20.2
Healthcare -1.4 7.9
Industrials 1.2 23.0
Information tech 1.5 32.0
Materials -0.8 16.9
Real estate -0.2 23.2
Utilities -0.1 16.5

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 7/12/19
1 week
0.10.0-1.3 Large
0.10.0-1.0 Mid Quality
0.00.0-0.1 Small
Value Core Growth
INTEREST-RATE SENSITIVITY
YTD
2.13.69.1 Large
2.44.515.9 Mid Quality
5.610.315.6 Small
Value Core Growth
INTEREST-RATE SENSITIVITY
U.S. Treasury bond yields as of 7/12/19 (%)
END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)
2 Yr 1.83 2.21 -38
10 Yr 2.11 2.39 -28
30 Yr 2.63 2.82 -19
2-10 spread 0.28 0.18 +9
10-30 spread 0.52 0.43 +9
U.S. bond sector total returns (%)
1 week YTD
Aggregate -0.2 5.7
Bank loans 0.2 6.2
Convertible 0.6 16.7
Corporate -0.4 10.5
High yield 0.0 10.3
MBS 0.0 4.2
Municipal 0.3 5.5
Preferreds 0.4 12.9
TIPS 0.2 6.2
Treasury -0.3 4.6
Global bond total returns (%)
1 week YTD
EM Local 0.3 7.9
EMD USD -0.3 11.6
Global Agg -0.2 4.9
Global Agg Ex-U.S. -0.2 4.4
Multiverse -0.2 5.2
Commodities (%)
1 week YTD
BBG Com Ind 2.5 7.0
Oil (WTI) 4.7 30.4
Gold 0.9 10.0
Currencies (USD) (%)
1 week YTD
EM FX 0.5 4.1
AUD 0.5 -0.5
CAD 0.5 4.7
CHF 0.6 0.1
EUR 0.3 -1.6
GBP 0.4 -1.4
JPY 0.4 1.6

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 6/30/19

as tracked by Strategic Insight
MONTH 12 Month ASSETS
U.S. equity -8.5 4.2 8,441.6
Sector equity 0.1 -46.3 884.8
Allocation -3.7 -71.4 1,256.5
International equity -6.2 10.8 3,170.8
Alternative -3.1 -22.3 183.4
Commodities 3.5 -1.0 95.9
Taxable bond 36.4 185.1 4,058.2
Municipal bond 7.1 47.4 789.9
Total all long-term funds 24.8 67.9 18,894.2

Leading Morningstar fund categories by monthly net flows ($B) as of 6/30/19

MONTH 12 Month ASSETS
Intermediate Core Bond 6.4 43.0 875.8
Corporate Bond 6.2 7.0 149.7
Ultrashort Bond 5.8 74.9 248.5
High Yield Bond 4.6 -3.1 290.2
Intermediate Core-Plus Bond 4.3 13.9 676.3

Lagging Morningstar fund categories by monthly net flows ($B) as of 6/30/19

MONTH 12 Month ASSETS
Bank Loan -3.5 -37.1 109.9
Short Government -2.9 16.1 67.1
Large Growth -2.9 -47.9 1,770.5
Large Value -2.8 -16.8 1,149.5
Trading--Leveraged Equity -2.4 -3.0 26.3
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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