Weekly Market Commentary

The Dow Jones Industrial Average rose 121 points for the week, up 0.7% to 17,690. The S&P 500 Index was up 1.2% to 2,104.  

The Nasdaq Composite rose 0.8% to close at 5,128. The S&P MidCap 400 Index closed the week at 1,503, up 1.8%. The Russell 2000 moved up 1.0% to end the week at 1,239.  

The MSCI ETF "EFA", the proxy for developed international equity markets, gained 1.4% for the week. Emerging markets, as represented by the MSCI ETF "EEM", was almost unchanged rising a mere 0.2% for the week.  

Domestic High Yield corporate bonds were positive, up 0.4% for the week, as measured by the Bank of America Merrill Lynch US High Yield Master II Index.  

Stocks cautiously advanced for the week, with most domestic indices ending the month of July in positive territory. The yield on the benchmark 10-year US Treasury note fell to 2.20%, the lowest level in more than three weeks. Oil prices continued to sink, with the price of West Texas Intermediate down to under $47.37 a barrel and Brent Crude sliding to $52.25. Other commodities such as copper and gold were also down sharply. The S&P GSCI index, a measure of a basket of 24 commodities, lost approximately 13% of its value in July, with nearly every single component trading in negative territory.   

High-yield debt yields, as represented by the Bank of America Merrill Lynch U.S. High Yield Master II Effective Yield, rose to new highs for the year, hitting 7.14% on Monday, the highest level since December 16th, 2014. High-yield bond funds reported net outflows of $1.722 billion for the week ended July 29th. $3.355 billion in new high-yield debt was issued across six transactions in the week ended July 24th.                 

In US economic news, the Federal Reserve held their July Federal Open Market Committee (FOMC) meeting, taking no action on interest rate policy. The Fed cited no change in what has been described as "moderate" economic growth. The Fed viewed the labor market as "solid" and described the unemployment rate as "declining." The general tone of the statement was slightly more upbeat than the previous one,  and Fed Chair Janet Yellen has indicated her intent to raise rates before the year is through, but the timing still remains uncertain. Second quarter GDP came in on the lower end of expectations, up 2.3% compared to the consensus estimate of 2.9%. The first quarter number was revised upward from 0.2% to 0.6%. Weekly jobless claims rose by 12,000 to 267,000. The less-volatile four-week moving average was down 3,750 to 274,750. Continuing claims, reported on a one-week lag, rose 46,000 to 2.262 million.      

In international economic news, Eurozone inflation was stable in July, casting doubts on the effectiveness of the European Central Bank (ECB)'s quantitative easing program. The ECB began buying bonds in March in an effort to spur economic growth and avoid deflation. After consumer prices saw a boost in May, the June and July readings have been lackluster, with inflation at 0.2% year-on-year, well below the ECB target of 2%.   

A high level of unemployment also threatens to derail the Eurozone recovery story. Across the Eurozone unemployment is at 11.1%, with Germany enjoying the lowest level at 4.7% and Greece the highest at 25.6%. In Asian market news, Chinese stocks continued to struggle, ending July down more than -14% for their biggest monthly loss in nearly six years, as measured by the Shanghai Composite Index.