Stocks Extend Losses Investors remained unnerved by the aggressive tone of Jerome Powell’s speech and subsequent comments from Fed officials suggesting a higher rate hike than the market expected at the Fed two-day meeting ending September 21. The probability of a 75 basis point hike in September rose to nearly 65%, up from just 28% a month ago. 4 Stocks moved steadily lower before finding some footing on Thursday. Friday’s employment report appeared to strike a “goldilocks” note (i.e., labor gains not so strong that it might trigger greater Fed hawkishness but robust enough to allay imminent recession fears). After early gains, stocks turned lower ahead of the holiday weekend. 4. The Wall Street Journal, August 29, 2022 |
Market Update |
ObservationsU.S. equities were negative on the week with the S&P 500 Index down -2.59%. Domestically, smaller sized companies underperformed their larger counterparts as the Russell 2000 index declined -3.85%. International stocks outperformed domestic stocks with MSCI EAFE down -2.46%. Emerging market stocks were better than developed with the MSCI EM index down -2.38%. U.S. bonds were negative as Bloomberg Barclays U.S. Aggregate Bond index was down -0.59% for the week. |
Outperformance of S&P 500 Companies with Higher International Revenue Exposure: The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the S&P 500 for Q2 2022 is 4.8%. For companies that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 1.2%. For companies that generate more than 50% of sales outside the U.S., the blended earnings growth rate is 10.2%.2 Streaming Takes the Lead: Americans spent more time watching streaming services than Cable or Broadcast TV in July, the first time that’s ever happened.3 Tennis Legend: Serena Williams now can say she has won a U.S. Open match in her teens, her 20s, her 30s and her 40s (with her daughter on hand) She also has won a championship at the U.S. Open in her teens, 20s and 30s. She was eliminated in the third round this year, calling it an end to a historic career.4 Women Led: Overall in 2021, women held about 27% of leadership positions—as chief executive, chief of human resources or general manager—in the Fortune 100, up from none in 1980. In 2001, a gap emerged between how fast men and women advanced, with women taking about 3.6 fewer years, on average, to move into the top 10 roles. The gap narrowed in 2011 to 2.9 fewer years, and it was about 1.5 years last year.5
3 https://www.wsj.com/articles/americans-spent-more-time-streaming-than-watching-cable-tv-in-julya-first-11660827184 4 https://sports.yahoo.com/analysis-serena-williams-keep-going-230421536.html 5 https://www.wsj.com/articles/women-who-get-to-corner-offices-get-there-faster-than-men-11661912741?mod=business_lead_pos12 |
Index Definitions S&P 500: The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization. NASDAQ: The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971. Dow Jones Industrial Average: The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928. Russell Mid-Cap: Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index. Russell 2000: The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The real-time value is calculated with a base value of 135.00 as MSCI EAFE: The MSCI EAFE Index is a free-float weighted equity index. The index was developed with a base value of 100 as of December 31, 1969. The MSCI EAFE region covers DM countries in Europe, Australasia, Israel, and the Far East. MSCI EM: The MSCI EM (Emerging Markets) Index is a free-float weighted equity index that captures large and mid-cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country. Bloomberg Barclays US Agg Bond: The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency). Bloomberg Barclays High Yield Corp: The Bloomberg Barclays US Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Barclays EM country definition, Bloomberg Barclays Global Agg: The Bloomberg Barclays Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. Bloomberg Barclays Municipal Bond Index: The Bloomberg Barclays U.S. Municipal Index covers the USD-denominated long-term tax-exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and prerefunded bonds. Disclosures Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance cannot guarantee future results. The statements provided herein are based solely on the opinions of the Advisor Group Research Team and are being provided for general information purposes only. 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