Equity markets slipped lower in the past week as early morning strength was consistently sold. Recently the Dow Jones Industry Average was down six out of seven days, but the magnitude was tame with just a 2.4% decline.
The S&P 500 and NASDAQ finished near their all-time highs after a flat week. But once again, this masks weakness under the surface. The Russell 2000 Index of small caps fell 1.6%.
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Domestic equities moved higher on the week as small caps bounced, just as it looked like the trap door was opening. The S&P 500 tacked on 2.2%, but advances of 3.6% in the NASDAQ and 3.7% in the Russell 2000 helped cyclicals outpace defensives.
The second quarter earnings season approaches a close with 95% of S&P 500 companies having reported results. It was a strong quarter for companies. Earnings and sales are up 94.40% and 25.97% respectively.
Domestic equities moved higher on the week; this time led by small caps. The Russell 2000 advanced 2.5% versus the 1.1% gain in the S&P 500. The NASDAQ was the laggard with a fractional drop.
The big headline this week was the GDP growth miss. GDP was expected to grow by 8.5% this quarter, however actual growth came in at 6.5%. Decreased federal government spending in the quarter slowed overall growth.
The S&P 500 rallied back this week to again set another high. The index was up 1.0% on the week as large cap domestic equities remain the source of outperformance.