Global stocks wrapped up another positive month, advancing +0.59%, despite an uptick in volatility. In fact, the +2.28% return for the S&P 500 in July marks the 6th straight month for gains in the US large cap index.
In the bond markets, yields dropped significantly, leading to price increases. The 10-year Treasury yield fell 25 basis points to 1.23%, marking the largest monthly decline since March of 2020.
A number of notable events have led to an interesting month in the markets.
The Federal Reserve kept interest between 0 and .25% this month. Fed Chair Jerome Powell signaled he is in no hurry to begin tapering the $120 billion-a-month rate of bond purchases.
Economic data released this month suggested the pace of growth may be slowing. The U.S. economy expanded at a 6.5% annualized rate in Q2, but that was below the Dow Jones expectation for 8.4% GDP growth. The latest weekly jobless claims also came in higher than expected. The core personal consumption expenditures price index advanced 3.5% in June YOY; however, this was below the Dow Jones 3.6% inflation expectation.
Growing fears over the rise of Delta variant COVID-19 cases and recent CDC suggestions have companies reconsidering mask requirements and vaccination policies while returning to offices. Some of the reopening stocks, particularly travel and leisure stocks, have seen a pullback this month. Time will tell how this plays into broader investor sentiment.
Chinese authorities imposed tough restrictions on some of the hottest sectors that spooked investors and led to a significant selloff in Chinese companies. This caused the broad emerging markets index to pull back -7.04% for the month of July.