John Hancock: Weekly Market Recap Week Ended September 1

Mixed jobs picture

Although August’s monthly U.S. jobs gain of 187,000 exceeded the downwardly revised figures for June and July, the longer-term trend points to a slowdown, as August’s total was well below the monthly average of 271,000 jobs over the past 12 months. The unemployment rate rose from 3.5% to 3.8%, but the increase was attributed in part to growth in the number of people entering the workforce.

Earnings scorecard

Companies in the S&P 500 recorded an average earnings decline of 4.1% versus the same quarter a year earlier, according to FactSet data from the recently concluded earnings season. That result marked the third consecutive quarterly earnings decline. For the second quarter in a row, consumer discretionary posted the strongest earnings growth rate among all 11 sectors, as it again exceeded 50%.

Inflation’s persistence

The U.S. Federal Reserve’s preferred gauge for tracking inflation showed that  consumer prices edged higher in July. The Personal Consumption Expenditures Price Index rose at a 3.3% annual rate, up from 3.0% in June. Excluding volatile food and energy prices, core inflation climbed 4.2% in July versus 4.1% in June.

2-year Treasury price rally

After spiking above 5.00% the previous week, the yield of the 2-year U.S. Treasury bond retreated well below that threshold, as diminishing medium-term expectations for rate hikes set off a price rally for 2-year notes. On Friday, they were yielding around 4.89%, down from the previous week’s closing yield of 5.06%, which was just shy of a year-to-date high reached in early March.

Source: https://www.jhinvestments.com/weekly-market-recap