Weekly Market Commentary

The Dow Jones Industrial Average plummeted 1,018 points for the week, declining -5.82% to 16,460. The S&P 500 Index was also down sharply, dropping 121 points, or -5.8%, to finish at 1,971.  

The Nasdaq Composite fell -6.8% to close at 4,706. The S&P MidCap 400 Index closed the week at 1,423, off -5.2%. The Russell 2000 was down -4.6% to end the week at 1,157.  

The MSCI ETF "EFA", the proxy for developed international equity markets, was down -6.4% for the week. Emerging markets, as represented by the MSCI ETF "EEM", fell -7.8%.  

Domestic High Yield corporate bonds were off -0.8% for the week, as measured by the Bank of America Merrill Lynch US High Yield Master II Index.  

US stocks sold off dramatically in their worst week of 2015 as the S&P 500 turned negative for the year. Sinking commodity prices and poor manufacturing data out of China prompted investors to exit international and emerging market stocks in favor of safe-haven US Treasuries and gold.  Gold rose to a five-week high.  The yield on the benchmark 10-year US Treasury note fell to 2.05%.  Oil prices continued to slide, with West Texas Intermediate breaking below $40 a barrel for the first time since 2009, before closing the week around $40.23.  Brent Crude fell to below $45.50.  High-yield bond funds saw a net inflow of $111.3 million for the week ended August 19th, reversing course after three consecutive weeks of net outflows.  High-yield bond issuance was up marginally in the week ended August 14th, with $4.6 billion in new debt issued across 9 transactions.  The Effective Yield on the Bank of America Merrill Lynch US High-Yield Master II Index stood at 7.38% as of August 21st.  

In US economic news, market expectations of a September interest rate hike have been all but erased after the release of rather dovish Federal Open Market Committee (FOMC) meeting minutes from July.  The minutes showed most Fed policymakers believe the conditions for a rate hike have not been met.  While FOMC members noted some improvements in the labor market, they cited a lack of inflation and concern over China in their decision to pause on implementing an interest rate policy liftoff.  The July Consumer Price Index rose only 0.1% in July, failing to meet expectations of a 0.2% increase.  Existing home sales data was positive, up 2% in July to an annual rate of 5.59 million.  Year-on-year sales are up 10.3% and the median price is up 5.6% at $234,000.  The Philadelphia Fed Business Outlook Survey index reading for August was stronger than expected at 8.3, compared to July's measure of 5.7.  The positive Philly Fed data was contradicted by Friday's Flash PMI report however, which showed a reduction to 52.9 in August from July's reading of 53.8.  Weekly jobless claims for the week ended August 15th were up 4,000 from the prior week at 277,000.  The lessvolatile four-week moving average was up 5,500 to 271,500.  Continuing claims, reported on a one-week lag, fell 24,000 to 2.254 million.  

In international economic news, concern over a weakening Chinese economy sent global stocks into panic mode after the Caixin China Manufacturing Purchasing Managers' Index fell to a six-and-a-half year low.  The Shanghai Composite Index ended the week down -11.5% in response.  In European news, Greece cleared one of the final obstacles in securing a third bailout after the plan won approval from the German and Dutch parliaments.  With the bailout secured, Greek Prime Minister Alexis Tsipras announced he would be stepping down.  While a majority of Greeks still support Tsipras, his concessions to the Eurozone during the bailout negotiations caused a great deal of friction in the left-wing Syriza party and will likely lead to further political uncertainty for the struggling nation.  Elsewhere in the Eurozone, manufacturing data was generally positive for August according to Markit's Purchasing Managers' Index, which rose to 54.1 in August from 53.9.