• Equity markets were mixed last week, with sector-specific catalysts driving relative performance. The S&P 500 barely moved on the week, while the Nasdaq gained 70 basis points on strength in tech stocks. The Dow saw the largest drop in the domestic market, and the MSCI EAFE was the worst-performing broad-based index overall.
• Although the shortened holiday week will bring fewer economic releases, Thursday’s nonfarm payroll and unemployment reports will be closely watched and could impact markets.
• The 10-year Treasury yield dropped to 2.50 percent intraday late last week and started this week slightly above that, at 2.52 percent. The U.S. government debt yield is down from its recent high 10 days ago, when it stood at 2.66 percent. We expect continued downward pressure on the 10-year yield, with 2.80 percent being the possible high mark in the near term.
Week-to-Date % Month-to-Date % Year-to-Date % 12-Month %
−0.06% 2.10% 7.17% 24.10%
0.70% 3.74% 5.94% 30.98%
−0.56% 0.90% 2.83% 14.85%
−0.98% 0.54% 4.77% 23.98%
MSCI Emerging Markets
0.39% 2.32% 5.75% 16.85%
0.16% 5.01% 2.89% 22.97%
Fixed Income Index
Month-to-Date % Year-to-Date % 12-Month %
U.S. Broad Market
−0.05% 4.01% 4.46%
−0.26% 3.10% 2.27%
0.19% 3.96% 4.68%
−0.01% 6.58% 6.63%
What to look forward to
We have a short schedule this week due to the Independence Day holiday. As this is the first week of the month, the normal slew of employment data will be released on Thursday instead of on Friday. Economists are expecting Nonfarm and Private Payrolls to increase by roughly the same amount during June as they did in May—at just north of 200,000 jobs.
The Unemployment Rate is forecast to remain unchanged as well, at 6.3 percent.
Aside from employment data, a number of reports covering activity among manufacturing, construction, and services firms will be released. Both the ISM Manufacturing and ISM Non-Manufacturing surveys are forecast to show sentiment staying steady during June, relative to the prior readings.
Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Barclays Capital Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Barclays Capital Mortgage-Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Barclays Capital Municipal Bond Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index measures the performance of intermediate (1- to 10-year) U.S. TIPS.
Authored by the Investment Research team at Commonwealth Financial Network.
© 2014 Commonwealth Financial Network®