WWith the United States moving closer to a 50% full vaccination rate against COVID-19, many have enjoyed a return to their regular lives and summer pleasures while others remain cautious. A recent increase in the “delta variant” is pushing up daily cases in the United States again, and various state and local governments are heeding CDC recommendations such as mask requirements for people vaccinated indoors.
Like the proverbial pebble in your shoe, COVID-19 continues to be a real heel. A ray of hope: COVID-related deaths are on the decline, and the ratio of coronavirus deaths per day to cases per day is similarly declining. The vaccine is doing its job in reducing the severity of COVID-19 cases and preventing deaths.
Also in July, after a year of waiting for fans and aging athletes, we finally have the chance to see the best in the world compete in Tokyo for the Summer Olympics. However, special attention has been paid to the cost of these particular games, especially given the economic impact of no fan being allowed to attend. The outlook for Japan’s general debt has jumped 21% in 2020, with its current level of debt projected through 2026. Economists, event experts and surely the country of Japan will be watching closely to see how the Games play out. most expensive Olympics of all time will be paid. . (Very long-term 40-year Japanese bonds, do you feel like it?)
As everyone tries to take advantage of what’s left of summer 2k21, we’re going to take a few moments to take a look at these key developments starting in July:
- Out of YCharts! The road to wealth
- Top Index Returns: Emerging Markets Fade
- Sector movement: 9 out of 11 positive, energy collapses
- Hot actions of the month: Healthcare is heating up
- Latecomers and losers: trips stop, energy runs out of gas
- Economic data: job openings at a high level, increase in the CPI
Out of YCharts! The road to wealth
If you had put $ 10,000 in the SPDR S&P 500 ETF Trust when it first went public in January 1993, you would have added 0 to that number this month. Including dividends, that same $ 10,000 investment actually grossed $ 170,000, a 16x return over just under three decades, and a fair share of corrections, bubbles, and crises along the way.
While one thing to note – as we pointed out in our second quarter economic update – stock valuations are stretched according to the “Buffett Indicator,” which measures total market capitalization relative to GDP. According to believers, a ratio of 1: 1 generally represents a fair valuation for the markets, while a higher number indicates potential overvaluation. Going forward, investors will ask: can these levels be sustained? (YCharts users: You can find the full set of Quarterly Economic Updates in the Help Center. Not a current customer? Contact us for access.)
Top Index Returns: Emerging Markets Fade
The S&P 500 rose 2.4% in July on second quarter earnings that beat most constituents’ expectations. The NASDAQ ended July up 1.2%, while international developed markets edged up 0.8%. High yield corporate bonds rose 0.4% while the Global Aggregate Bond index rose 1.3%, but the big story in July was the MSCI EM index which fell 6.7 % largely because of the massive selloff in Chinese stocks, which wiped out the index’s gains in 2021.. The MSCI China Index fell 14.2% in July alone, and its emerging markets index is weighted 37.5% in China.
Sector movement: 9 out of 11 positive, energy collapses
July was an overall positive month, with the 4.9% gain in health care leading the way. Real estate, utilities and technology were not far behind, increasing 4.6%, 4.3% and 3.9% respectively. Financials slipped half a percent, but the big loser was energy, ending July down 8.3% and falling more than 12% at some point in the middle of the month. due to low oil prices.
Hot actions of the month: Healthcare is heating up
Six of the top ten players in the July S&P 500 are from the healthcare industry: West Pharmaceutical Services (WST), Bio-Rad Laboratories (BIO), PerkinElmer (PKI), HCA Healthcare (HCA), DexCom (DXCM) and Moderna (MRNA), the latest of which jumped 50.5% in July and topped our hot inventory chart thanks to strong sales of COVID-19 vaccines in Asia and received a golden ticket to join the S&P 500. Quick and casual restaurant Chipotle Mexican Grill (CMG) can attribute most of its July gain to exploding profits and year-over-year growth.
Albemarle (ALB), Monolithic Power Systems (MPWR) and Mid-America Apartment Communities (MAA) were also among the top ten performances of July.
Latecomers and losers: trips stop, energy runs out of gas
#Hotstocksummer was abruptly ended in July for leisure travel companies Las Vegas Sands (LVS), Wynn Resorts (WYNN), Norwegian Cruise Line Holdings (NCLH), Carnival (CCL) and Caesars Entertainment (CZR), as that EPS and second quarter revenue reports generally fell short of expectations across the board. Unfavorable epidemiological prospects, along with the reintroduction of mask warrants in Las Vegas and the CDC’s attempt to prevent cruise liners from resuming operations, have pushed these companies to the bottom of the July barrel. Energy companies DiamondBack Energy (FANG), Occidental Petroleum (OXY), Marathon Oil (MRO) and Phillips 66 (PSX) have all been hit hard, in part due to the drop in U.S. crude oil below $ 70 a barrel in July.
The nine leisure and energy travel companies were joined by packaged goods inventory Lamb Weston Holdings (LW) to complete the top ten worst performers in July.
Market and advisor news
S&P 500 Announces Second Highest Net Profit Margin Since 2008 For Second Quarter (FactSet)
What is the optimal rebalancing strategy? (YCharts)
Alternative investment sales soar in 2021 (InvestmentNews)
Bitcoin Tax Implications Assessment (WealthManagement.com)
2008 vs 2020: What Happens When the Fed Funds Rate is 0% (YCharts)
US personal spending strengthened in June with prices (FA-Mag)
Economic data: job openings at a high level, increase in the CPI
Use
June’s unemployment rate stood at 5.9%, up 10 basis points from May. Initial jobless claims fell to 400,000 as of July 24, hovering near pandemic-era lows, but still about double what they were at the start of 2020. Job vacancies, however, have risen to the ground. rise to 9.21 million in May, the highest level since at least 2000.
Production and sales
Retail and restaurant sales in the United States rose 0.6% in June, and durable goods orders continued to rise after consecutive months of declines in February, March and April, up 0.8 %.
Lodging
New single-family homes sold in the United States fell 6.6% in June, the third consecutive month of decline and the largest decline of the three. Coincidentally, the month-long supply of existing homes rose 10 basis points for the third consecutive month, reaching 2.6 in June. The heat in the real estate market continued into June, keeping the change in the US house price index at 1.7%, its second-largest result on record just behind May 2021.
Consumers
Prices and spending saw another month of steady growth. The consumer price index in the United States rose 0.9% in June, its largest month-on-month increase since June 2008, while consumer spending (PCE) rose 0.5%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
