US Equity Markets hit all-time highs last week, fully recovering from the COVID-19 induced lows in late March despite no progress out of Washington on additional stimulus talks and economic data that was worse than expected. The S&P 500 rose 0.7% for the week to bring its gains for the year up to 5.2%. The Nasdaq rallied a sharp 2.7% for the week as mega-cap Technology stocks continue to drive the market, bringing the Nasdaq up 26.1% for the year. The Russell 2000 (small-cap stocks) continues to underperform, down 1.6% for the week and down 7.0% for the year.
Global Equity Markets dropped last week amid poor economic data out of Europe and ongoing tensions between the US and China. Specifically, the flash Purchasing Manager's Index (PMI) for August in Europe dropped from July, raising concerns about the economic recovery there. As a result, Developed Markets fell 0.9% for the week with Europe underperforming Asia. For the year, Developed Markets are down 7.5%. Emerging Markets decreased 0.1% for the week and are now down 2.0% for the year.
US Economic Data disappointed last week, causing rates to drop. Specifically, initial jobless claims rose to 1.1 million, up from an adjusted 971K the prior week and worse than expected. In addition, measures of US manufacturing activity in August came in below forecasts. As a result, the yield on the US 10-Year Treasury fell to 0.63% from 0.71% the prior week.
Of Interest to Us
The S&P 500 is a market cap-weighted index, meaning that the stocks with the highest market caps in the index drive the performance of the index, while the stocks with the lowest market caps in the index have little impact on the overall performance. The S&P 500 is up 5.2% for the year, driven by mega-cap Technology stocks. However, the equal-weighted S&P 500 is actually down 5.6% for the year, suggesting that the performance of the average stock in the S&P 500 is much lower than market indices indicate.
for the week ending 8/21/2020
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