Weekly Market Recap

Week ended July 13

Market-moving news

Market-moving news

Market-moving news
Midyear momentum

Stocks’ strong start to July continued as the major U.S. indexes posted solid gains for the second week in a row. The Dow recorded three daily triple-digit point gains, while the S&P 500 climbed above the 2,800 level for the first time in more than five months. 

Market-moving news
Earnings roll in

Some of the nation’s biggest banks reported second-quarter results in the kickoff to an earnings season that’s expected to be a strong one, in part due to the impact of tax cuts. Profits for companies in the S&P 500 are forecast to grow around 20% compared with last year’s second quarter, according to FactSet.

Market-moving news
Inflation uptick

A monthly measure of inflation rose at the fastest pace in more than six years. The Consumer Price Index rose 2.9% in June from the same month a year earlier, offsetting some of the positive impact from workers’ recent wage gains.

 

Market-moving news
Yield flattening

Thursday’s release of inflation data bolstered expectations of further interest-rate increases, sending the yield of the 2-year U.S. Treasury note to the highest closing level in 10 years. Meanwhile, the gap between the yields of 2-year and 10-year government debt narrowed to the smallest in nearly 11 years.

 

Market-moving news
Trade tug-of-war

The ongoing trade dispute between the U.S. and China continued to drive financial markets. The Dow posted its only daily decline of the week on Wednesday after the U.S. threatened to impose additional tariffs on $200 billion of Chinese products. Trade tensions eased on Thursday and stocks rallied.

Market-moving news
Tech surge

Technology stocks led the broader market higher on Thursday, sending the NASDAQ to a record level and its biggest daily percentage gain in a month and a half.

Oil dips

Crude oil prices declined for the week, edging back down toward the $70-per-barrel level that was breached in early May. The week’s biggest daily decline came on Wednesday, when rising trade tensions and new data on Libya’s oil production weighed on prices.

 

 

Volatility subsides

Although stocks have made some big daily moves in recent days, investors’ expectations of near-term volatility have decreased markedly, as measured by the Cboe Volatility Index. As of Friday’s close, the VIX had fallen about 32% from its level of June 27, a recent high point. The index is down 67% from its year-to-date high, which was reached in early February.

The week ahead: July 16-20

Monday

  • Retail sales, U.S. Census Bureau
  • Business inventories, U.S. Census Bureau

 

 

 

Tuesday

  • Federal Reserve Chairman Jerome Powell testifies before U.S. Senate Banking Committee
  • Industrial production and capacity utilization, U.S. Federal Reserve
  • Housing Market Index, National Association of Home Builders

 

 

Wednesday

  • Federal Reserve Chairman Jerome Powell testifies before U.S. House Financial Services Committee
  • Housing starts, U.S. Census Bureau

Thursday

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

Friday

  • No major reports scheduled

 

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 7/13/18
1 week
0.71.52.2 Large
0.30.81.5 Mid
-0.8-0.40.0 Small
Value Core Growth
YTD
0.36.011.7 Large
1.64.99.3 Mid
7.510.613.5 Small
Value Core Growth
Index/market total returns as of 7/13/18 (%)
Close Week YTD
Dow Jones Industrial Average 25,019.4 2.3 2.4
NASDAQ Composite Index 7,826.0 1.8 14.0
S&P 500 Index 2,801.3 1.5 5.9
MSCI EAFE Index 1,972.7 0.2 -1.7
Cboe Volatility Index 12.2 -8.9 10.3
International/developed (%)
1 week YTD
EAFE 0.2 -1.7
Europe -0.1 -1.4
France 0.3 2.8
Germany -0.3 -5.0
Italy -1.2 -0.8
Japan 0.7 -2.8
Spain -2.3 -4.1
Switzerland 0.4 -4.2
U.K. 0.0 -0.7
Emerging markets (%)
1 week YTD
EM 1.7 -5.6
Brazil 4.1 -13.1
China 1.3 -2.2
India 3.0 -4.9
Indonesia 5.4 -15.8
Korea 1.3 -10.5
Mexico -0.4 2.5
Russia 2.2 7.8
Taiwan 3.2 1.3
S&P 500 sectors (%)
1 week YTD
S&P 500 Index 1.5 5.9
Consumer discretionary 2.1 15.0
Consumer staples 1.0 -6.3
Energy 0.8 7.3
Financials 1.1 -2.6
Healthcare 1.7 6.8
Industrials 2.2 -1.8
Information tech 2.3 16.1
Materials 0.3 -2.2
REITs -0.8 1.8
Telecom -0.3 -6.6
Utilities -1.2 1.5

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 7/13/18
1 week
0.00.00.2 Large
0.00.11.0 Mid Quality
0.40.50.4 Small
Value Core Growth
INTEREST RATE SENSITIVITY
YTD
0.7-0.6-2.1 Large
0.1-0.8-4.5 Mid Quality
2.90.6-2.3 Small
Value Core Growth
INTEREST RATE SENSITIVITY
U.S. Treasury bond yields as of 7/13/18 (%)
END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)
2 Yr 2.57 1.89 +68
10 Yr 2.83 2.40 +43
30 Yr 2.93 2.74 +19
2-10 spread 0.26 0.51 -25
10-30 spread 0.10 0.34 -24
U.S. bond sector total returns (%)
1 week YTD
Aggregate 0.2 -1.2
Bank loans 0.3 2.0
Convertible 0.5 8.0
Corporate 0.4 -2.6
High yield 0.5 0.6
MBS 0.1 -0.7
Municipal 0.2 0.1
Preferreds -0.6 1.1
TIPS 0.0 0.4
Treasury 0.1 -0.9
Global bond total returns (%)
1 week YTD
EM Local -0.1 -7.1
EMD USD 0.9 -3.1
Global Agg -0.4 -1.4
Global Agg Ex-U.S. -0.8 -1.5
Multiverse -0.4 -1.5
Commodities (%)
1 week YTD
BBG Com Ind -2.7 -4.0
Oil (WTI) -2.2 19.0
Gold -1.2 -5.6
Currencies (USD) (%)
1 week YTD
EM FX 0.0 -3.8
AUD -0.2 -5.3
CAD -0.5 -4.8
CHF -1.4 -2.9
EUR -0.8 -2.8
GBP -0.6 -2.4
JPY -1.7 0.2

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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