Macro Overview
U.S. markets posted modest gains in a session marked by anticipation for key earnings, pushing the S&P 500 to a new record high. The S&P 500, as tracked by IVV, climbed 0.24% as investors awaited the post-close earnings report from AI bellwether Nvidia. The energy sector was the standout performer, with the Energy Select Sector SPDR Fund (XLE) rallying 1.12% on the day. In contrast, international markets showed signs of weakness, particularly in China, where the iShares MSCI China ETF (MCHI) fell sharply by 2.60%. The session reflected a broader “wait-and-see” approach, with investors digesting recent gains and positioning ahead of today’s significant economic data releases.
U.S. Size & Style
The domestic equity landscape saw a clear rotation into value and smaller-capitalization stocks. Small-cap value, represented by IJS, was a top performer, gaining 0.95%, while its mid-cap counterpart (IJJ) also rose a solid 0.75%. This contrasted with the more muted gains in large-cap growth (IVW), which was up only 0.12%. This trend suggests a broadening of market participation beyond the mega-cap growth names that have led for much of the year. On the flows front, U.S. Large Cap Blend funds continued to attract significant capital, pulling in over $6 billion in the past week, with Vanguard’s S&P 500 ETF (VOO) leading the pack.
U.S. Sectors & Industries
Energy (XLE) was the clear leader, gaining 1.12%, with strong performances from Oil & Gas Equipment & Services (XES, +1.97%) and Retail (XRT, +1.81%). Technology (XLK) also posted a respectable gain of 0.54%. On the other hand, Health Care (XLV) and Industrials (XLI) were slight laggards, finishing down -0.06% and -0.01%, respectively. On the flows front, the Financial Select Sector SPDR Fund (XLF) was a notable leader, pulling in $0.57 billion in new assets over the past week.
Global Thematic
Thematic investing saw wide performance divergence. Cloud Computing (SKYY) soared 3.28%, leading a strong rally in technology-related themes. In stark contrast, sustainability-focused ETFs struggled, with the Invesco Solar ETF (TAN) dropping -2.03% and the Global X Uranium ETF (URA) falling -1.90%. The flow data revealed significant pain for some thematic funds, with the First Trust Dow Jones Internet Index Fund (FDN) experiencing over $232 million in outflows in the past week.
Developed Markets ex-U.S.
Performance in developed international markets was broadly negative. While Canada (EWC) bucked the trend with a 0.73% gain, major European economies faltered, with Germany (EWG) down -0.57% and France (EWQ) slipping -0.05%. Asian markets were also weak, highlighted by a -1.16% drop in Hong Kong (EWH). Overall, the iShares MSCI EAFE ETF (EFA) tracking the space fell -0.24%.
Emerging Markets
A significant split emerged between Latin America and Asia. Brazil (EWZ) was a bright spot, rallying 1.43%. Conversely, China-focused ETFs sold off sharply, with the iShares MSCI China ETF (MCHI) tumbling -2.60% and the KraneShares CSI China Internet ETF (KWEB) falling -2.73%. The broad iShares MSCI Emerging Markets ETF (EEM) declined -0.60% for the day, weighed down heavily by the poor performance of Chinese equities.
Fixed Income
The bond market saw modest gains as investors sought safety ahead of economic data. Inflation-Protected Treasuries (TIP) rose 0.23%, and the core taxable bond benchmark (AGG) was up 0.10%. High-yield corporate bonds (HYG) also performed well, adding 0.12%. Emerging market debt was the weakest area, with the VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC) falling -0.20%. Taxable bond funds saw strong inflows across the board, with nearly $1.7 billion flowing into core strategies and almost $1 billion into ultrashort funds over the past week.
Commodities
The commodities complex was mixed. Natural Gas (UNG) was the day’s biggest winner, jumping 1.84%, while WTI Crude Oil (USO) gained 0.85%. On the losing side, Industrial Metals (DBB) fell -1.37% amid concerns about global growth. Precious metals were quiet, with Gold (GLD) up 0.20%. Flow data showed significant redemptions from gold ETFs, with SPDR Gold Shares (GLD) and SPDR Gold Minishares (GLDM) losing a combined $708 million in the last week.
Cryptocurrency
The digital asset market delivered a split decision. Bitcoin-related ETFs, such as IBIT, gained 0.87% on the day. However, Ethereum funds saw broad losses, with the iShares Ethereum Trust (ETHA) declining by -0.75%. Despite the positive daily performance for Bitcoin, the asset class saw over $726 million in outflows over the past week, indicating some profit-taking or investor caution.
What to Watch Today
All eyes will be on the morning’s economic data releases. The second estimate of Q2 GDP, due at 8:30 AM ET, will be scrutinized for insights into the health of the U.S. economy. Investors will be looking for a number that indicates continued growth without being strong enough to stoke inflation fears. Simultaneously, the weekly Initial Jobless Claims report will provide a timely update on the labor market. A significant deviation from expectations in either report could introduce volatility and set the market’s tone for the remainder of the week.
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This report is for informational purposes only and should not be considered investment advice. This report was generated with assistance from AI.
