Telemus Weekly Market Review

July 3 – July 7, 2017

Equity indices kicked off the third quarter on a positive note, finishing the first week of July with modest gains. Trading volume was light as many investors took some extra time off to celebrate the Fourth of July holiday. The S&P 500 barely budged adding 0.07% for the week while the Nasdaq and the Dow finished with gains of 0.21% and 0.30%, respectively.

The major averages settled mixed in an abbreviated session on Monday. The financials and energy sectors were bullish, finishing at the top of the day’s leaderboard, and helped the S&P 500 overcome the top-weighted technology sector’s third-consecutive loss. The tech-heavy Nasdaq wasn’t so lucky, dropping 0.5%, while the Dow outperformed, hitting a new intraday record high.

U.S. markets were closed on Tuesday in observance of the Fourth of July holiday, but the benchmark index picked up where it left off in Wednesday’s session, registering another modest win with the technology group leading the charge this time. The minutes from the June 13-14 FOMC meeting were released on Wednesday, but did little to change the market’s rate-hike expectations. In the minutes, Fed members seemed generally upbeat about economic activity and gave the impression that they believe the recent softness in inflation is transitory. In addition, Fed officials were divided on when to start unwinding the Fed’s balance sheet; some wanted to start in a couple of months while others preferred to hold off until the end of the year.

Investors pulled back on Thursday, dragging all three major averages into negative territory for the week and leaving the S&P 500 below its 50-day simple moving average for the first time in nearly two months. The market expressed concerns about less accommodative central bankers, evidenced by rising interest rates around the globe. U.S. Treasuries moved in a curve-steepening trade, helping to keep the influential financial sector ahead of the broader market.

The Employment Situation Report for the month of June, which showed the addition of 222,000 nonfarm payrolls and stable hourly earnings was the focus of Friday’s session. The report was largely seen as another ‘Goldilocks’ report, pointing to an economy that is growing at a modest rate without the worry of inflation.

Eight of the S&P 500’s eleven sectors ended Friday in the green, which was just enough to bring the benchmark index back into positive territory for the week. The technology group was the top-performing sector once again, benefiting from broad strength. However, the energy group underperformed as the decline in crude oil prices weighed.

The fed funds futures market still points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 59.1%, up from last week’s 54.4%. The benchmark 10 year U.S. Treasury note closed Friday at 2.386% a jump of almost 9 basis points for the week.

WTI crude futures struggled this week, dropping 4.1% to $44.33, following news that OPEC exports increased in the month of June and headlines that Russia is not in favor of deepening the current OPEC-led production cut agreement. In addition, the weekly inventory report from the Department of Energy, which showed a rise in U.S. production alongside a larger than expected drop in crude and gasoline stockpiles, also prompted selling pressure.

July 10 – July 17 Economic Calendar

  • Monday
  • Labor Market Conditions Index
    10:00 AM ET
  • TD Ameritrade IMX
    12:30 PM ET
  • Consumer Credit
    3:00 PM ET
  • John C. Williams Speaks
    11:05 PM ET
  • Lael Brainard Speaks
    12:30 PM ET
  • Neel Kashkari Speaks
    1:20 PM ET
  • Esther George Speaks
    2:15 PM ET
  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • NFIB Small Business Optimism Index
    6:00 AM ET

  • Redbook
    8:55 AM ET
  • JOLTS
    10:00 AM ET
  • Wholesale Trade
    10:00 AM ET
  • Lael Brainard Speaks
    12:30 PM ET
  • Neel Kashkari Speaks
    1:20 PM ET
  • Esther George Speaks
    2:15 PM ET
  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Janet Yellen Speaks
    8:30 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Janet Yellen Testifies
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Beige Book
    2:00 PM ET
  • Esther George Speaks
    2:15 PM ET
  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • PPI-FD
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Janet Yellen Speaks
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Charles Evans Speaks
    11:30 AM ET
  • Lael Brainard Speaks
    1:00 PM ET
  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Consumer Price Index
    8:30 AM ET

  • Retail Sales
    8:30 AM ET
  • Industrial Production
    9:15 AM ET
  • Robert Kaplan Speaks
    9:30 AM ET
  • Business Inventories
    10:00 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This market commentary is a matter of opinion and is for informational purposes only.  It is not intended as investment advice and does not address or account for individual investor circumstances.  Investment decisions should always be made based on the client’s specific financial needs, goals and objectives, time horizon and risk tolerance.  The statements contained herein are based solely upon the opinions of Telemus Capital, LLC.  All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.