Economic Data and Market Highlights
The S&P 500 fell 61 basis points for the week on lower volume with the decline caused by value names as the Russell 1000 Value fell 2.03% while the Russell 1000 Growth rose 28 basis points powered by Consumer Discretionary names (+1.40%) and Communication Services (+2.47%). Small cap names fell further, dropping 2.55%, with growth names falling even more than value (Russell 2000 Growth, -3.26%, vs Russell 2000 Value, -1.79%.
Developed markets fell 85 basis points with the UK, Germany, and Japan falling 1.23%, 0.97%, and 1.78% respectively.
The Magnificent Seven have regained their dominance accounting for over one-third of the S&P 500. As of Friday, they were responsible for roughly 52% of the index’s return and 55% of the MSCI All Country World Index.
The strengthening of the Equal weighted S&P 500 over the summer has waned and we seen divergence over the last few weeks.
The valuations of US equities continue to be rich relative to other developed economies as the green line in the chart below indicates. With US valuations so rich, investors continue to look at other opportunities but developed economies outside of the US seem to lack a competitive advantage that US companies in general seem to maintain.
Crypto funds saw their biggest inflows. Bitcoin dropped midweek after Google’s quantum computing Willow project announcement induced panic that its success could break bitcoin’s security protocols but it was later noted that that possibility is years away.
The Past Week’s Notable US data points (with revisions)
The Upcoming Week’s notable US data points
Data Source: Bloomberg, BBC, Charles Schwab, CNBC, the Daily Shot HFR (returns have a two-day lag), Jim Bianco Research, Market Watch, Morningstar, Pitchbook, Standard & Poor’s, the Wall Street Journal, Morgan Stanley, Goldman Sachs and IR+M
Authors:
Jon Chesshire, Managing Director, Head of Research
Michael McNamara, Analyst
Sam Morris, Analyst