U.S. stocks were up for the week as the dovish fed continues to give stock investors what they want. Stocks were down early this week after calculating the strong jobs report would dissuade the Federal Reserve from cutting rates. Rather, Jerome Powell played down the latest economic data and trade progress and signaled the Fed was still likely to cut rates as soon as this month. So with economic outlook not looking so dreadful along with a dovish Fed, stocks continued their rising momentum that started at the beginning of June. Particularly large cap stocks which pushed the C-fund up 0.82% from the previous week despite early losses. On top of their momentum large cap indices are reaching new highs and without retreating.
Small cap stocks were also up for the week but without the same luster seen in large cap stocks. Bonds fell this week after data showed a larger than expected increase in inflation. Higher inflation decreases the purchasing power of bonds once they’ve reached maturity from when they were purchased originally.
Next week earnings season kicks off and we’ll find out if these reports will have investors buying more with indices already at highs. Momentum is a powerful thing in markets and with the Fed ready to accommodate any damage to the market it may be easy to attract new buyers who are sick of sitting on the sidelines while stocks soar.
Here are the weekly, monthly, and annual TSP fund returns for the week ending July 12th:
The SPY (S&P 500 / C-fund) continue to trade within the rising trading channel of mid to late June. There are still open gaps below that must be on the minds of traders but momentum has been strong and support must be broken to fill the gaps. The reached new highs to end the week and surpassed the 300.0 milestone for the first time. The C-fund rose 0.82% for the week.
The Dow Completion Index (S-fund) produced gains along with the C-fund this week but lagged behind with a gain of 0.26%. The index is testing the highs May and has also been riding on decent momentum lately. We will see if earnings reports will be able to push the index above the May highs or send it to test support.
EFA (EAFE Index /I-fund) continued to fall after gapping down the previous Friday. The index gapped down further below the highs of May on Tuesday but recovered some of the losses late in the week and the gap was filled. This seems to be vulnerable spot for the index as the options seem to be to carry on with the rise of June after the recent hiccup, or to fall further and test moving averages and fill forgotten gaps. The I-fund was down 0.54% for the week.
AGG (Bonds / F-fund) fell this this week with the larger than expected rise in inflation. The open gap from the previous week was left open and the index fell below its 20-day EMA for the first time since April. The last breach of the 20-day EMA was brief before bonds continued on their relentless rise. Could this index be coming to a rest or will yields fall as long as the Fed has its own fears about the economy. The F-fund was down 0.22% for the week.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
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