Two the Point — Navigating Volatility

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.