The S&P 500 Index returned 0.75% last week, finishing the week with another all-time closing high of 4,468. Equity markets continue to climb as the index posted a 1.72% return for the first two weeks of August and is up 20.01% year-to-date. The Dow Jones Industrial Average also set a closing record of 35,515.38 last week. The week started on a negative note as markets opened lower on Monday with weekly US COVID-19 cases rising to levels not seen since earlier in the year as the delta variant continues to spread, increasing concerns of future economic growth. The worst of the negative sentiment was felt by the energy sector as the S&P 500 Energy Index declined 1.46% and crude oil prices declined 2.64% on Monday. Stocks advanced on Tuesday as an infrastructure spending plan was passed by the US Senate.
Treasury yields were little changed last week. The Consumer Price Index rose 5.4% in July compared to last year for the second month in a row, which was slightly higher than expected. The 5.4% increase in the CPI matches the highest yearly increase in inflation since August 2008. However, the CPI’s one-month 0.5% increase in July cooled from June’s 0.9% rate. The increase in producer prices was also higher than expected, rising 1% in July compared to the prior month. Initial jobless claims came in at 375K for the week ended August 7, which was lower than the prior week and near pandemic lows of 368K. Combined with the prior week’s strong jobs report, the data suggests the labor market continues its recovery despite increasing coronavirus cases.