DOW
NASDAQ
S&P
10 YR. T-NOTE

Market Dashboard

New every Monday with last week’s recap and notes on the week ahead.

Last update: 7/8/2024

US equities: Tech leads stock indices to record highs

  • Major stock indices notched new record highs, finishing the week with solid gains:
    • The S&P 500 Index was up 2.0%.
    • The Nasdaq 100 Index rose 3.6%.
  • Mega-capitalization technology stocks drove much of the gains in market-cap-weighted indices. However, the S&P 500 equal weight index, which holds the same amount of each stock, remained flat, indicating that the market’s advance is not broad-based.
  • Within the S&P 500, Communication Services and Information Technology (both up 3.9%) were the best performing sectors, while Health Care (down 0.9%) and Energy (down 1.3%) performed the worst.
  • Small-cap stocks finished lower, with the Russell 2000 Index down 1.0%.

US fixed income: Yields slump as bond ‘fear gauge’ spikes

  • The 10-year Treasury yield decreased 12 basis points to 4.28% last week.
  • The two-year Treasury yield fell 14 basis points to 4.61%.
  • The ICE BofAML MOVE Index of implied Treasury volatility—known as the bond market’s “fear gauge”—spiked amid changing probabilities for the US presidential election outcome.

Jobs: US job growth slows, unemployment rises in June

  • The US economy added 206,000 jobs in June, better than the consensus estimate of 190,000, but less than the downwardly revised 218,000 jobs created in May.
  • April and May’s nonfarm payrolls were revised sharply lower, by a combined 111,000.
  • The US unemployment rate rose to 4.1% in June, from 4.0% in May, reaching its highest level since late 2021, but likely not yet signaling a recession.
  • The labor force participation rate, which indicates the level of working-age people who are employed or actively seeking a job, rose slightly to 62.6%.
  • Average hourly earnings cooled, and average employment growth over the last three months was the slowest since early 2021, indicating a cooling labor market in the second quarter of 2024.

Key economic data: US services sector contracts

  • The Institute for Supply Management (ISM) index of US services sector activity fell into contractionary territory in June, at 48.8, down from 53.8 in May, amid a drop in new orders. The ISM manufacturing index also showed a slight decline further into contraction.
  • The Citigroup US Economic Surprise Index fell to its most negative level since August 2022, suggesting that incoming economic data is meaningfully lower than expectations.
  • Such readings reinforced the “bad news is good news” narrative, with equity investors cheering signs of economic slowing, believing it will keep the Federal Reserve on track to cut interest rates this year.

US monetary policy: Fed sees inflation cooling, economy slowing

  • Fed officials highlighted progress on inflation and noted that the economy is slowing, according to minutes from the June Federal Open Market Committee meeting released last week.
  • A sustained slowdown in hiring, coupled with the recent moderation in inflation, supports expectations that Fed policymakers may begin cutting rates in September.

Cross-Asset Performance Table

Returns and prices of the most popular indices and assets as of 7/5/24

Cross Asset Performance table

1) Annualized 3-year % return. 2) Option Adjusted Spread (OAS): OAS is a measurement of the spread of a fixed income security rate and the risk-free rate of return, which is adjusted to take into account an embedded option. Equity risk premium is the excess return that an individual stock or the overall stock market provides over a risk-free rate. The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.


S&P 500 Sector Performance

Communication Services and Information Technology were the strongest-performing S&P 500 sectors, while Health Care and Energy performed the worst

S&P Sector Performance chart

Russell US Equity Style Performance

Large-cap stocks have recently outperformed small caps

Russell US Equity Style Performance table

US Equity Valuation

S&P 500 Equity Risk Premium

Bonds continue to appear attractive relative to equities

S&P 500 Equity Risk premium chart

P/E Relative to Rest of World

The S&P 500 remains expensive relative to the rest of the world

P/E relative to the rest of the world chart

US Fixed Income Valuation

Last week, the 10-year Treasury yield decreased 12 bps to 4.28% and the two-year Treasury yield fell 14 bps to 4.61%

US Fixed Income Valuation table

†Interest Rate Volatility as measured by ICE BofAML Option Volatility Estimate Index (MOVE); *Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. Mortgage loans are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity; **Options Adjusted Spread (OAS): A measurement of the spread of a fixed income security rate and the risk-free rate of return, which is adjusted to take into account an embedded option


Latest Economic Data

The unemployment rate increased to 4.1% in June, from 4.0% in May. The nonfarm payrolls report showed 206,000 new jobs added for the month, less than the gains in May but above consensus expectations of 190,000

Latest Economic Data table

Sources: Bloomberg, FactSet, Morgan Stanley Wealth Management Global Investment Committee

 

The Week Ahead

  • Eurozone Sentix Investor Confidence
  • NY Fed 1-Yr Inflation Expectations
  • US Consumer Credit
  • NFIB Small Business Optimism Index
  • China CPI YoY
  • China PPI YoY
  • Japan PPI YoY
    
  • US CPI YoY
  • US Initial Jobless Claims
  • US Continuing Claims
  • US Monthly Budget Statement
  • Delta Airlines Reports Earnings
  • PepsiCo Reports Earnings    
  • US PPI YoY
  • University of Michigan Consumer Sentiment
  • JP Morgan Chase Reports Earnings
  • Citigroup Reports Earnings
  • Wells Fargo Reports Earnings

Cross-Asset Performance

S&P 500: A market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. It measures the movement of the largest issues. Standard and Poor's chooses the member companies for the 500 based on market size, liquidity and industry group representation. Included are the stocks of industrial, financial, utility, and transportation companies. Since mid-1989, this composition has been more flexible and the number of issues in each sector has varied. The returns presented for the S&P 500 are total returns, including the reinvestment of dividends each month.

Dow Jones Industrial Average: Computed by summing the prices of the stocks of 30 companies and then dividing that total by an adjusted value—one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities.

NASDAQ Composite: Measures the performance of all issues listed in the NASDAQ Stock Market, except for rights, warrants, units, and convertible debentures. Morningstar reports the NASDAQ Composite as a price return.

MSCI Europe IMI: This index captures large, mid and small cap representation across 16 Developed Markets countries in Europe. With 1,372 constituents, the index covers approximately 99% of the free float-adjusted market capitalization across the Developed Markets countries of Europe.

MSCI Japan IMI: This index is designed to measure the performance of the large, mid and small cap segments of the Japan market. With 1,134 constituents, the index covers approximately 99% of the free float-adjusted market capitalization in Japan.

MSCI EM (Emerging Markets) Index: A free float-adjusted market-capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. For more information, visit the MSCI web site.

MSCI EAFE (Europe, Australasia, Far East) Index: A free float-adjusted market-capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of the following 21 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. For more information, visit the MSCI website.

S&P 400 Index: This index provides investors with a benchmark for mid-sized companies. The index measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

S&P 600 Index: This index measures the small-cap segment of the U.S. equity market. The index is designed to track companies that meet specific inclusion criteria to ensure that they are liquid and financially viable.

S&P 500 Growth: This index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest growth characteristics by using a style-attractiveness-weighting scheme.

S&P 500 Value: This index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest value characteristics by using a style-attractiveness-weighting scheme.

Bloomberg Commodity Index: Made up of 22 exchange-traded futures on physical commodities. The index currently represents 20 commodities, which are weighted to account for economic significance and market liquidity.

US Trade-Weighted Dollar Index: A weighted average of the foreign exchange value of the US dollar against a subset of the broad index currencies that circulate widely outside the US.

MSCI Emerging Markets Currency Index: sets the weights of each currency equal to the relevant country weight in the MSCI Emerging Markets Index.

Bloomberg US Aggregate Index: The US Aggregate Index covers the dollar-denominated investment-grade fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS pass-through securities, asset-backed securities, and commercial mortgage-based securities. These major sectors are subdivided into more specific sub-indices that are calculated and published on an ongoing basis. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. This index is rebalanced monthly by market capitalization.

Bloomberg US Corporate High Yield Bond Index: This index is composed of fixed-rate, publicly issued, non-investment grade debt.

S&P Sector Performance

The S&P 500 Consumer Discretionary sector comprises those companies included in the S&P 500 that are classified as members of the consumer discretionary sector.

The S&P 500 Consumer Staples sector comprises those companies included in the S&P 500 that are classified as members of the consumer staples sector.

The S&P 500 Energy sector comprises those companies included in the S&P 500 that are classified as members of the energy sector.

The S&P 500 Financials sector comprises those companies included in the S&P 500 that are classified as members of the financial sector.

The S&P 500 Health Care sector comprises those companies included in the S&P 500 that are classified as members of the health care sector.

The S&P 500 Industrials Sector comprises those companies included in the S&P 500 that are classified as members of the industrials sector.

The S&P 500 Information Technology Sector comprises those companies included in the S&P 500 that are classified as members of the information technology sector.

The S&P 500 Materials Sector comprises those companies included in the S&P 500 that are classified as members of the materials sector.

The S&P 500 Communications Services Sector comprises those companies included in the S&P 500 that are classified as members of the telecommunications services sector.

The S&P 500 Utilities Sector comprises those companies included in the S&P 500 that are classified as members of the utilities sector.

The S&P 500 Real Estate Sector comprises those companies included in the S&P 500 that are classified as members of the real estate sector.

US Equity Style Performance

Weekly and monthly style performance charts use Russell 1000, Russell Mid Cap, and Russell 2000 style indexes to represent large cap, mid cap, and small cap respectively.

Russell 1000: Consists of the 1000 largest companies within the Russell 3000 index. Also known as the Market-Oriented Index, because it represents the group of stocks from which most active money managers choose. The returns we publish for the index are total returns, which include reinvestment of dividends. Frank Russell Company reports its indexes as one-month total returns.

Russell 1000 Growth: Market-capitalization weighted index of those firms in the Russell 1000 with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 includes the largest 1000 firms in the Russell 3000, which represents approximately 98% of the investable US equity market.

Russell 1000 Value: Market-capitalization weighted index of those firms in the Russell 1000 with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 includes the largest 1000 firms in the Russell 3000, which represents approximately 98% of the investable US equity market.

Russell 2000: Consists of the smallest 2000 companies in the Russell 3000 Index, representing approximately 7% of the Russell 3000 total market capitalization. The returns we publish for the index are total returns, which include reinvestment of dividends.

Russell 2000 Growth: Market-weighted total return index that measures the performance of companies within the Russell 2000 Index having higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the of the investable US equity market.

Russell 2000 Value: Market-weighted total return index that measures the performance of companies within the Russell 2000 Index having lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the of the investable US equity market.

Russell Midcap: Measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index. As of the latest reconstitution, the average market capitalization was approximately $4.0 billion; the median market capitalization was approximately $2.9 billion. The largest company in the index had an approximate market capitalization of $12 billion.

Russell Midcap Growth: Market-weighted total return index that measures the performance of companies within the Russell Midcap Index having higher price-to-book ratios and higher forecasted growth values. The Russell Midcap Index includes firms 201 through 1000, based on market capitalization, from the Russell 3000 Index. The Russell 3000 Index represents 98% of the of the investable U.S. equity market.

Russell Midcap Value: Market-weighted total return index that measures the performance of companies within the Russell Midcap Index having lower price-to-book ratios and lower forecasted growth values. The Russell Midcap Index includes firms 201 through 1000, based on market capitalization, from the Russell 3000 Index. The Russell 3000 Index represents 98% of the of the investable U.S. equity market.

P/E Relative to Rest of World

TOPIX: This free-floated-adjusted index tracks all domestic companies of the exchange’s First Section.

US Fixed Income Valuation

ICE BofAML Option Volatility Estimate Index (MOVE): A yield curve-weighted index of the normalized implied volatility on one-month treasury option.

How can E*TRADE from Morgan Stanley help?

What to read next...

Global growth should stay steady at just over 3% in 2024 and 2025, though volatility will remain as a pickup in growth around the world contrasts with a slowdown in the U.S.

Amid a backdrop of steady growth, declining inflation and interest rate cuts, investors may look to corporate credit and agency mortgage-backed securities for opportunity as well as European and Japanese equities.

Looking to expand your financial knowledge?