PAS Weekly Commentary

Sellers Take Control in Shortened Week

The stock market had a tough four-day week, with the S&P 500 losing 1.7% and closing lower in each session as buyers appeared exhausted. The Dow Jones Industrial Average (-2.2%) and the Russell 2000 (-2.8%) both declined more than 2.0% while the Nasdaq Composite declined 1.6%.

All 11 S&P 500 sectors finished the week in negative territory, led lower by the real estate (-3.9%), health care (-2.7%), and industrials (-2.5%) sectors with losses over 2.0%. The top-weighted information technology sector declined 1.8%, while the consumer discretionary sector (-0.3%) outperformed on a relative basis.

No one event dragged the market lower. Instead, it was a confluence of negative-sounding news that pressured risk sentiment amid speculation for a larger pullback.

On the macro-related front:

  • Goldman Sachs reduced its Q4 and 2021 GDP forecasts
  • The enhanced unemployment benefits expired
  • Axios reported that Senator Manchin (D-WV) would only support $1.5 trillion for any human infrastructure plan
  • The ECB said it could start reducing its emergency asset purchases by a moderate pace
  • Treasury Secretary Yellen warned about the economic consequences if lawmakers don't resolve the debt-ceiling issue
  • Both the $24 bln 30-year bond and the $38 bln 10-yr note auctions saw decent demand, reflecting lingering growth concerns
  • Cryptocurrencies sold off, remind some investors about reducing their risk exposure

On the corporate front:

  • A court ruled that Apple (AAPL) must give developers the ability to create their own payment options
  • Johnson & Johnson (JNJ), Merck (MRK), and Amgen (AMGN) were downgraded to Equal-Weight from Overweight at Morgan Stanley
  • The airlines lowered their Q3 outlooks, as did Sherwin-Williams (SHW) because of raw material issues.

The 10-yr yield increased two basis points to 1.34% amid some hot PPI data for August and continued improvement in the weekly initial and continuing claims report. 

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Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Data and rates used were indicative of market conditions as of the date shown and compiled by Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. 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. Each company’s security affects the index in proportion to its market value. 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. Dow Jones Industrial Average is a widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service-oriented firms. 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. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

Park Avenue Securities LLC (PAS) is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker/dealer offering competitive investment products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC.

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2021-126663 (Exp. 12/21)