With school around the corner, the S&P 500 has retraced more than half its decline since the highs in January. The S&P 500 is now down less than 10% YTD including dividends. U.S. equities rose for a fourth straight week. Boosted by positive inflation news. Last week all indexes finished up. The Dow up 2.99%, S&P 3.31%, and Nasdaq 3.10%.
The S&P 500 Index posted the fourth straight week of gains. The index has gained 13.3% since the mid-year mark. A large contrast to the index’s -19.96% return for the first half of 2022. Due to inflation and Ukraine-Russia War, equities have been volatile and experienced challenges for most of 2022. However, last week brought positive news as the year-over-year CPI figure in July and PPI numbers both came in lower than expected. The figures were also lower than the previous month. Investors interpret this information believing that the chance the Federal Reserve might lower their future rate hike response in combating inflation. The release of preliminary August data by the University of Michigan Consumer Sentiment Index also gave stocks a boost. All sectors were in positive territory last week.
Historically, August’s final weeks are slow as traders squeeze in their final vacations before the kids head back to school. Although the U.S. economic calendar is lighter compared to recent activity, there will be two important releases mid-week. Wednesday’s publication of the FOMC’s July meeting minutes will be reviewed closely as committee members have been publicly pushing back against the perceived dovishness from Chair Powell’s press conference. The retail sales report for July is expected to confirm that consumer spending is weakening as personal savings shrink and credit balances increase. Additionally, Walmart and Target will report earnings after both companies warned last month of decreasing margins and increasing inventories. Other events investors will keep an eye on include housing starts and existing home sales.
Year-to-date index performance; Dow down 7.09%, S&P down 10.2%, and Nasdaq down 16.6% through the close on Friday.
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