U.S. stocks closed down last week, driven by weakness in technology stocks. It is hard to exaggerate the significant influence that tech stocks have had over the markets in this present economic environment. Notably, although more than 70% of the S&P 500 stocks were higher last week, the index closed lower for the third week in a row because of the drag in the technology sector. Positively speaking, cyclical, small-cap and international stocks and oil all did well, finishing positive for the week. Overall, the S&P 500 was off by .6% (driven down by tech) and the Dow finished flat.
It is very important to remember that the S&P 500 tracks just 500 publicly traded companies, with the Dow tracking just 30. The under or over performance of a few of those behemoth tech companies within an index can, if we are not careful, make us lose sight of the power of a highly diversified portfolio that is positioned across multiple asset classes to help with volatility as well as drive long term positive outcomes.
On the positive front last week, The Federal Reserve signaled that it will keep rates near zero through at least 2023 to help the economy weather the health and economic crisis. Additionally,
- The latest home builders index rose last week for the fifth consecutive month to a high;
- Initial jobless claims fell last week to the lowest level since mid-March;
- The University of Michigan Consumer Sentiment Index rising to a six-month high;
- U.S. retail sales increasing for the fourth straight month.
As always, thank you for the opportunity you have given me to serve you.