Winthrop Partners’ Economic and Market outllook at 7-18-22

The Markets (as of market close July 15, 2022)
Despite a late-week rally, stocks ended last week lower. A strong retail sales report for June showed continued economic strength, even in the face of rising inflation and concerns over an economic recession. Investors still aren’t totally sold on risk, however. Each of the benchmark indexes listed here ended last week lower, led by the Global Dow, which fell more than 2.0%. Year to date, the Nasdaq is nearing a 30.0% downturn from its value at the end of 2021. Crude oil prices fell by nearly $7.00 to end the week below $100 per barrel. The dollar continued to rise, while gold prices faltered. Fed rate hikes and fears of a recession have sent the dollar to the highest level since March 2020.
Monday saw stocks slump, as trading volume was at its lowest pace in 2022. Tech shares led the sell-off, pulling the Nasdaq down 2.3%. The Russell 2000 also dipped a little more than 2.00%, followed by the Global Dow and the S&P 500, which slid 1.2%. The Dow lost 0.5%. Ten-year Treasury yields tumbled 11.0 basis points to close at 2.99%. Crude oil prices dropped $1.20 to sit at $103.50 per barrel. The dollar advanced, while gold prices declined. Traders may have pulled back from stocks as they awaited inflation data with the release of the June Consumer Price Index on Wednesday.
Stocks tumbled lower for the second consecutive day last Tuesday. Once again, the Nasdaq led the downturn, giving back 1.0%, followed by the S&P 500 (-0.9%), the Dow (-0.6%), the Global Dow (-0.4%), and the Russell 2000 (-0.2%). The yield on 10-year Treasuries dipped lower last Tuesday and is about 12.0 basis points below the two-year rate. This so-called “inversion curve” is often a sign of a contracting economy. Crude oil prices fell $8.40 to hit $95.68 per barrel. The dollar rose against a basket of currencies, while gold prices lagged.
Wall Street saw equities slide last Wednesday as investors retreated from risk following a greater-than-expected jump in the latest Consumer Price Index. Both the Dow and the Global Dow fell 0.7%, while the S&P 500 dropped 0.5%. The Nasdaq dipped 0.2%, while the Russell 2000 broke even on the day. Ten-year Treasury yields fell 5.4 basis points, settling at 2.90%, while the two-year rate rose to 3.14%, deepening the “inversion” of the yield curve. Crude oil prices and the dollar were relatively unchanged, while gold prices reversed course, gaining $6.30 to reach $1,731.10 per ounce.
Last Thursday, traders spent most of the day retreating from stocks, worried that recent inflation data would prompt a 100-basis point rate hike at the end of the month. However, Wall Street recovered somewhat after Federal Reserve officials seemed to quel those concerns. Nevertheless, the Global Dow (-1.6%), the Russell 2000 (-1.1%), the Dow (-0.5%), and the S&P 500 (-0.3%) still ended the day in the red. The Nasdaq ended the day flat. Crude oil prices and the dollar advanced marginally, while gold prices slid lower. The yield on 10-year Treasuries climbed to 2.96%, up 5.6 basis points. Two-year Treasury yields dipped lower, but not enough to make a dent in the inverted yield curve. Disappointing quarterly results from some major financial firms pulled the financial sector lower and added to the concern that an economic downturn is coming.
Stocks rallied last Friday to end a topsy-turvy week of trading. It’s possible that some investors were buoyed by a solid retail sales report, while other traders may have been taking advantage of some possible low-hanging bargains. In any case, each of the benchmark indexes listed here posted solid gains, led by the Russell 2000 and the Dow, which advanced 2.2%. The S&P 500 climbed 1.9%, the Nasdaq added 1.8%, and the Global Dow gained 1.7%. Long-term bond prices advanced, dragging the yield on 10-year Treasuries down marginally to 2.93%. Crude oil prices rose to $97.66 per barrel. The dollar and gold prices dipped lower.  Click here for the complete article:  Winthrop Partners Market & Economic Outlook 7-18-22