Weekly Market Review & Analysis For June 20, 2022

The market of Friday put a finishing mark on a comeback in a short trading week. It was significant, with huge gains for the major indexes. To give a perspective on this, take a look at the S&P Mid Cap 400 market this week: it was the worst performer and increased 5.1 percent! It's true that the top indexes also had plenty of recovery space. At the beginning of the week, the indexes were under the water between 7 percent and 12.3 percent over the month. Indices Year-To-Day summary is as follows:

  • Dow Jones Industrial Average -13.3 percent
  • S&P 500: -17.9 percent 
  • S&P 400: -17.9 percent 
  • Russell 2000: -21.4 percent
  • Nasdaq Composite: -25.8 percent 

This week was an acceleration-driven rebound from a highly oversold market condition. This was not a mass rebound, however. Some rigor within the strike was focused on issues of growth. It may seem odd considering the size and magnitude of gains; however, it echoes in the week's group of leaders. 

In particular, the mega-cap stock market was among the top performers, which was given the advantage that its earnings would hold better in a more challenging economic environment. The Vanguard Mega-Cap Growth ETF (MGK) rose 8.0 percent. Despite that, it's still lower by 3.6 percent for the month and 26.4 percent for the entire year.

The strength of the mega-cap stock market boosted that of consumer discretionary (+8.3 percent) and information technology (+7.3 percent), and communication services (+7.0 percent) sectors. But the relative strengths of these sectors were shadowed this week by the comparative strength of countercyclical sectors and the relative drawback of cyclical industry sectors.

For instance, the health care (+8.2 percent) and utilities (+7.2 percent) along with consumer staples (+6.6 percent) sectors have all outperformed the S&P 500; however, the energy (-1.6 percent), materials (+2.7 percent) industrials (+4.2 percent) and financial (+5.1 percent) market sectors all fell short of those of the S&P 500. The performance gap could have been much more significant if not for Friday's rally.

The issue of growth was a regular aspect of the market this week. They were evident in the underperformance of growth stocks compared to the value stocks and for the big-caps compared to the smaller and midcap stores. These were also apparent across other market sectors.

The Two-year U.S. Treasury note yield fell twelve basis points in the week, to 3.06 percent, after dropping below 2.9 percent earlier during the week's market trading. The Ten-year note yield fell eleven basis points during the week to post 3.13 percent after a toying with 3.0 percent at the beginning of the week.

Market other news

In other market news, West Texas Intermediate (WTI) crude oil futures dropped to $101.53 per barrow on Wednesday before recovering to close at $107.53 the Friday's session, falling by a small amount over the week. Copper futures visited a low of $3.64/lb in the early hours of Friday, closing down 9.2 percent for the week with closure at $3.74/lb. Silver and gold were lower during the trading week as the entire commodity market weakened significantly. 

Growth issues were an important topic for the market during the Q&A segment in Fed Chairman Powell's semiannual Monetary Policy Testimony before Senate Banking Committee on Wednesday and the House Financial Services Committee on Thursday. Unsurprisingly, there was confusion regarding how the Fed will likely get the desired soft landing through an aggressive rate-hike strategy. Fed Chair Powell admitted that the task is a challenge.

More upbeat than expected guidance for the entire year issued by FedEx (FDX) following closing on Thursday has tempered some fears about growth at the week's close. Also helping hand for the market was given by the Fed's commitment to reassure the stress test that banks would have enough capital reserves to continue lending even in the worst-case scenario of a recession.

In conjunction with some surprisingly recent data on May's home sales market, the news reports fueled a broad-based rally on Friday's trading session, which led to its first week of winning week in June. The S&P 500 index crossed our Mean Res 3788 mark on Friday following hovering there during Wednesday and Thursday sessions - the close on Friday near its high for the day.

This article was printed from TradingSig.com

Print Article