Foundations

Foundations

Weekly Market Commentary

All eyes on Federal Reserve Chairman Powell

 

Market Recap week ending 7/12/2019

All eyes were Federal Reserve Chairman Powell last week as he provided testimony on monetary policy in front of Congress.  The Chairman came off as quite dovish as he critiqued components of the US economy.  He highlighted weakness in consumer spending and also sluggish business investment.  The later most likely tied to the continued uncertainty on trade.  He also noted that inflation continues to be muted although PCE data out last week surprised to the upside.  That said, the markets cheered the dovish tone and sent the S&P 500 to fresh new highs.  The S&P 500 gained 0.8% for the week; the Dow outpaced the other major indices closing up 1.5%, while the NASDAQ increased by 1.0%.  The Russell 2000 lagged and fell -0.4% for the week.  Of note, the Russell is still 10% lower than its all-time high set in August of last year (1740).  Despite the dovish rhetoric, US Treasuries lost a bit of ground last week as yields increased across the curve.  The 2-year note yield increased by 3 basis points to close at 1.84% while the 10-year added 6 basis points to close with a yield of 2.11%.  At the end of the week, the Fed Fund futures implied a 100% probability of a 25 basis point cut at the end of July and a 21.4% chance of a 50 basis point cut.  Gold was little changed for the week but did gain ~$7 to close at 1407 an Oz.  West Texas Intermediate crude was higher on the week as tensions continued to simmer between the US and Iran, weaker than expected supply data, and concerns over supply disruptions due to tropical storm Barry in the Gulf.  WTI also managed to reclaim its 50-day moving average and settled at $60.21 up from last weeks close of $57.40.  Second quarter earnings kick off in earnest next week with many of the Financials set to report.   Please let us know if you have any questions. 

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Darren Leavitt, CFA Portfolio Manager & Sr. Market Analyst, CFA

Darren Leavitt, CFA Portfolio Manager & Sr. Market Analyst, CFA

Dan Biagini