Financial News and Insights | Sanderson Wealth Management

July 2021 Market Update | Sanderson Wealth Management

Written by Phil Frattali, CFA | Aug 2, 2021 8:41:13 PM

A busy month.

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.

Fed meeting- no change.

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.

Soft data.

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.

The Delta variant- masks are back.

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.

China crackdown.

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.