John Hancock: Weekly Market Recap Week Ended August 2nd

July high

July extended a strong year-to-date run for the major U.S. stock indexes, with the S&P 500 setting record highs en route to a 1.4% total return for the month. The index’s year-to-date return through July was 20.2%—the best seven-month start to a year since 1997, according to S&P Dow Jones Indices.

Not dovish enough?

As expected, the U.S. Federal Reserve cut interest rates for the first time since late 2008, but Chairman Jerome Powell’s reluctance to offer positive guidance on any further rate cuts got a chilly response from equity investors. Stock indexes fell around 1% after Wednesday’s quarter-point rate cut.

Back below 2% 

Equity market volatility put many investors shifting to the fixed-income market, as bond prices rallied, sending yields down sharply. The yield of the 10-year U.S. Treasury bond dropped from 2.08% at the end of the previous week to as low as 1.84% in intraday trading on Friday—the lowest since November 2016.

Volatility returns

News on trade tensions and interest rates overshadowed mostly solid earnings reports and jobs numbers, and stock indexes retreated sharply from the prior week’s record highs. The indexes dropped around 3%, interrupting a recent run of positive momentum as stocks returned to their levels of late June.

Source: https://wmr.jhinvestments.com/