Friends,

Major US equity indexes hit record highs during the month of July in the face of an uptick in COVID-19 cases across the world as the Delta variant rapidly spread.  With a 70% vaccination rate in the US, investors reaction to the spread has been subdued.   

In the US, the S&P 500, Nasdaq 100, and Russell 1000 growth indexes were the best performers in July notching gains of 2.40%, 2.80% and 3.30%.   Micro Caps and the Russell 2000 which had been some of the best performers in the first half of the year loss some momentum, down 5.50% and 3.60% respectively.

SOURCE: NASDAQ

Internationally the Hang Seng dropped a stunning 10% dipping to its lowest level since November of 2020 as stress in the Chinese technology industry weights on the index.  European indexes were largely unchanged.

As we spoke about in our June newsletter, inflation concerns are still a point of concern for the markets.  The Federal Reserve noted the US economic rebound remains on track despite rising input costs, higher commodity prices and a tight labor market.  The Federal Reserve still feel this increase in inflation is “transitory”, however they did warn uncertainty remains high and the risk of these transitory pressures becoming more persistent is an area of concern. As we noted in June, we are keeping a keen eye on this as prolongated inflation readings that are not transitory could push the Federal Reserve to increase overnight rates at a more accelerated pace. 

The bond market is has become comfortable that inflation is benign.  Long dated bond yields which rallied 20 basis points in July.  The yield on the 30yr US Treasury dropped from 2.08% on June 30th to 1.88% on July 30th.

As always, if you have any questions feel free to reach out.

Best,
Bob

This material is intended for general public use and is for educational purposes only.  By providing this content, Park Avenue Securities LLC is not undertaking to provide any recommendations or investment advice regarding any specific account type, service, investment strategy or product to any specific individual or situation, or to otherwise act in any fiduciary or other capacity.  Please contact a financial professional for guidance and information that is specific to your individual situation.  Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. The Hang Seng Index is a free float-adjusted market-capitalization-weighted stock-market index in Hong Kong. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Each company's security affects the index in proportion to its market value.  Indices are unmanaged, and one cannot invest directly in an index. Past performance is not a guarantee of future results. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit and inflation risk. Equities may decline in value due to both real and perceived general market, economic and industry conditions Opinions expressed are those of the author and not necessarily those of Guardian or PAS. 2021-124911 Exp 8/22

Source Bloomberg