This week’s market movements highlight the importance of diversification and the resilience of the broader economy, despite short-term volatility.
Key Insights:
- Stock Market Reaction: Friday’s selloff was triggered by a weaker-than-expected July employment report, with the unemployment rate rising to 4.3%.
- Historical Context: The Federal Reserve has historically cut rates at the onset of recessions, often following a credit crunch, which hasn’t occurred this time.
- Job Market Resilience: Layoffs fell sharply in July to 25,900, and permanent job losses declined for the third month in a row, indicating a strong job market.
- Manufacturing Sector: The Institute for Supply Management® (ISM®) national Manufacturing Purchasing Manager’s Index® (M-PMI®) fell to 46.8, but the ISM® Services PMI® showed growth in employment for the first time in five months, suggesting broader economic stability.
- Fixed Income Performance: Fixed income has performed well during recent volatility, with the 10-year Treasury yield falling below 4% as investors seek safety.
More from TWO THE POINT
- Two the Point — Navigating VolatilityIn our weekly video series, we highlight one observation we think is most important regarding the economy and the financial markets. This week we discuss navigating volatility.
- Two the Point — Market Valuations Beyond the Mega-CapsIn our weekly video series, we highlight one observation we think is most important regarding the economy and the financial markets. This week we discuss market valuations beyond the mega-caps.
- Two the Point — Market Marvels: The Magnificent RotationIn our weekly video series, we highlight one observation we think is most important regarding the economy and the financial markets. This week we explore recent market shifts and Q2 earnings season highlights.