Shorter weeks because of holidays always makes my workweek better, apparently the market feels the same! Stocks climbed across the board reclaiming their losses from last week. Nasdaq led with +4.6%, S&P 500 +1.9%, and the Dow meandered up +0.8%.
Stocks started shakily on Tuesday but recovered on the support of the lows from last week. The Tuesday bounce ignited the rebound for the rest of the week with the communication, tech, and consumer discretionary sectors leading the way. The three groups went up +4.9%, +4.3%, and +4.6% respectively, putting some much-needed space between themselves and their mid-June lows.
Diving deeper into the tech sector, big chipmaker players like AMD and NVIDIA were among the best performers this week, bouncing off of their lowest levels in at least a year. The VanEck Semiconductor ETF ($SMH) moved up +8.91% for the week, improving its year-to-date loss to -32.6%.
The news highlight of the week was the release of the June FOMC meeting minutes where policymakers recognized the risk for growth slowdown due to tougher policy and a concern that higher inflation could become more established in this environment if the public starts to question the Fed’s resolve. They agreed that moving to a restrictive approach to policy is appropriate.
In other news, Treasuries gave back a chunk of their gains from last week as the 10-year yield rose above its 50-day moving average. The yield increased by 21 basis points to 3.1% and the 2-year yield rose to 3.12%, inverting the spread again.
Crude oil fell past the $100 barrel mark this week, a level not reached since the end of April. Growing concerns about the slowdown of global growth was the cause of selling pressure early this week. However, after that we saw a bounce back above the $100 mark as WTI crude ended the week above $105 per barrel, down 3.1% from last Friday.
Next week, potentially impactful items on the economic calendar include the US’s CPI reading (forecasted for a 0.3% decrease on the last reading), Bank of Canada policy report, US Retail Sales (forecasted to increase 1.3%), and the Consumer Sentiment Index which to my surprise is forecasted to increase.
Looks like the market is poised to push higher next week assuming it can push through the last highs we saw at the end of June. If the planned economic data is received well, it might just be the push we need to have a good week next week.
However, regardless of if the market is up or down, my approach to investing stays the same. We buy strong dividend payers with healthy balance sheets and solid businesses, as shown in our buys this last week (you can read about our buys here). Keep your eyes open for good opportunities to add to those kinds of companies and stay patient. Thank you for reading!
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