This week’s market movements highlight the importance of diversification and the resilience of the broader economy, despite short-term volatility.
Key Insights:
- Stock Market Reaction: Friday’s selloff was triggered by a weaker-than-expected July employment report, with the unemployment rate rising to 4.3%.
- Historical Context: The Federal Reserve has historically cut rates at the onset of recessions, often following a credit crunch, which hasn’t occurred this time.
- Job Market Resilience: Layoffs fell sharply in July to 25,900, and permanent job losses declined for the third month in a row, indicating a strong job market.
- Manufacturing Sector: The Institute for Supply Management® (ISM®) national Manufacturing Purchasing Manager’s Index® (M-PMI®) fell to 46.8, but the ISM® Services PMI® showed growth in employment for the first time in five months, suggesting broader economic stability.
- Fixed Income Performance: Fixed income has performed well during recent volatility, with the 10-year Treasury yield falling below 4% as investors seek safety.
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