PAS Weekly Commentary

S&P 500 Finally Broke Through to All-time Highs

Monday to Wednesday was a tease for market participants in that the S&P 500 narrowly missed out on an all-time closing high in every session.

It finally got over the hump on Thursday and ended the week with a 0.4% gain. Price action was relatively tight ranged throughout the week for the benchmark index.

The Nasdaq Composite (+1.9%) and Russell 2000 (+2.2%) each rose about 2%, while the Dow Jones Industrial Average (‐0.8%) declined nearly 1.0%.

From a sector perspective, the S&P 500 real estate (+2.0%), health care (+1.9%), information technology (+1.4%), and consumer discretionary (+1.6%) sectors finished the week as leaders. The latter was propped up by a 4% gain in Amazon.com (AMZN).

On the other hand, the cyclical financials (‐2.4%), materials (‐2.0%), and industrials (‐1.7%) sectors declined around 2.0%.

The underperformance of the cyclical stocks was partially due to profit‐taking interest and an underlying belief that the economy is running into peak growth rates. The latter viewpoint was indirectly corroborated by the Treasury market, which appeared to be sticking with the peak inflation thesis.

Specifically, the 10‐yr yield fell ten basis points this week to 1.46%, even though total CPI was up 0.6% m/m in May (Briefing.com consensus 0.4%) and up 5.0% yr/yr. Interestingly, even the stock market liked the report as it ran with the peak inflation argument expressed by Treasuries.

Speculative stocks did well, too, presumably on the understanding that the Fed isn't in a rush to tighten or communicate it will tighten policy. Economics polled by Reuters expected the Fed to officially announce a plan to taper asset purchases in August or September.

Separately, Biogen's (BIIB) Alzheimer's treatment received FDA approval, sending BIIB shares up 39% for the week. The iShares Nasdaq Biotechnology ETF (BIIB) gained 5.9%.

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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 Briefing.com. 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 – 122706 (Exp. 9/21)

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