The stock market ended July with the sharpest decline in the Standard and Poor’s 500 Index since April. After hitting an all-time high during the month, the S&P 500 ended down 1.38%. Not surprisingly, the S&P 500 Volatility Index surged 13%. On a positive note YTD returns on the S&P 500 index remain a healthy 5.66%.
Small Cap stocks endured a punishing month, trailing their larger counterparts by the widest margin in nearly five years. The S&P Midcap 400 and the S&P SmallCap 600 declined down 4% and 5% respectively.
Outside the U.S., developed markets, as measured by the MSCI EAFE Index, ended the month down 2%, while emerging markets as measured by the MSCI Emerging Markets Index gained 2%. Asia stocks had a banner month, ending up 4.5%. The MSCI European Index ended July with a 3.8% loss. Japan finished the month up 0.58%.
Despite the market dive at the end of July, the US economy roared back with 4% growth in second quarter. Nonetheless latest economic analysis indicates that key sectors including durable goods consumption, business equipment investment and federal government spending continue to underperform.
Fixed income indices had mixed performances, with yields decreasing slightly on long dated Treasuries. The S&P U.S. Investment Grade Corporate Bond Index finished up 0.01%, outpacing its high-yield and international counterparts, which were down 1.31% and 1.54%, respectfully. Barclays Investment Grade Municipal Bond Index gained 0.15% and their TIPS Index was flat.
Commodities fell, agriculture in particular. At month end Gold and oil both were down a few percentage points. Global Real Estate securities were stable.
Stocks ended the month a negative note. Investors are acting cautiously given the geopolitical outlook but analysts remain upbeat.
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