Equities were soft this week with the S&P 500 losing 0.7%. The broad index fared better than both domestic small caps and emerging markets which were down 1.1% and 1.5% respectively. Markets continue to face a plethora of crosscurrents. New this week was the announcement of a Presidential impeachment inquiry.
The big news this week was the drone attack on the Abqaiq oil facility in Saudi Arabia. The attack impacted 5% of the global oil supply. Crude oil prices were up 13% the first trading day after the attack, but prices have since moderated. The moderation is due to the Saudis announcing they expect most of the production at the facility to be up and running by the end of the week.
Equities rallied on the week, led by a surge in small caps. The S&P 500 gained a solid 2.2% on the week, but the laggard Russell 2000 rocketed more than 6%. There was a massive rotation within equities as momentum names were hit extremely hard and forgotten value names surged.
Second quarter GDP revisions show slower growth than was expected. The revision shows GDP growth of 2%. This is down from the initial reading of 2.1%. The downward revision is due to lower than expected local government spending, exports, private inventory investment, and residential investment. Strong personal consumption expenditure (PCE) was the major positive contributor to the growth.