Stocks Bounce Back After Rough Start:
Stocks finished last week with modest losses, masking a volatile five-day trading period in which investors reacted to recession concerns before later dismissing the slowdown talk as speculation as the week progressed.
The Dow Jones Industrial Average slipped 0.60%, while the Standard & Poor’s 500 Index ended flat (-0.04%). The Nasdaq Composite dipped 0.18%. The MSCI EAFE Index, which tracks developed overseas stock markets, fell 1.21%.1,2
Source: Bloomberg Finance, L.P.
Stocks Stage Comeback
Monday was the worst day for the S&P 500 and the Dow in nearly two years. As recession talk grew louder, investors took a “risk off” position.
On Monday, the Japanese market had its worst drop since 1987 as market participants unwound positions from a popular trading strategy called a “carry trade” amid a global sell-off in stock prices.3
But on Thursday, initial jobless claims fell less than expected—a positive sign for the labor markets— which quieted some of the recession talk. Also, as the week progressed, there was growing speculation that the July jobs report was more of an outlier than a lead indicator of a pending recession.
By Friday’s close, all three major averages had regained most of the week’s losses.4
Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
Mortgage Update
Last Thursday, the average rate on a 30-year fixed mortgage dropped to 6.47 percent—a 15-month low. Many home buyers welcomed the news, and it appeared to help support Thursday’s rally.5
But the announcement left some wondering whether rates would continue to trend lower. Mortgage rates are tied to the interest rates set by the Federal Reserve. Some speculated the drop was due to market participants anticipating the Fed would adjust rates in September, which remains anything but certain.6
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1The Wall Street Journal, August 9, 2024
2Investing.com, August 9, 2024
3CNBC.com, August 5, 2024
4The Wall Street Journal, August 8, 2024
5The Wall Street Journal, August 8, 2024
6The Wall Street Journal, August 9, 2024
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