Markets were mixed this week, with the S&P 500 reaching new all time highs. Economic data was mixed, but the most impactful news was a substantial increase in nonfarm payroll hiring, with the 850K June hiring surge coming in at approximately 17% over analyst expectations. On the downside, the unemployment rate rose along with disappointing construction spending and manufacturing PMI numbers. Overall, the economy is well positioned to continue recovering from pandemic lockdowns. New COVID-19 infections remained little changed this week, with 7 day moving averages rising by slightly more than 1500 a day over the prior week. The most recent infection data keeps the moving average near lows not seen since March 2020 during the pandemic’s first wave.

Overseas, developed markets outperformed emerging markets, with both indices returning negative performance. European indices were mostly negative, while Japanese markets returned negative performance as well for the week. Improving prospects against the pandemic as well as improved prospects for economic recovery should continue to help lift markets globally over time.

Markets were mixed this week as investors continue to assess the state of the global economy. While fears concerning global stability and health appear to be in decline, the recent volatility serves as a great reminder of why it is so important to remain committed to a long-term plan and maintain a well-diversified portfolio. When stocks were struggling to gain traction last month, other asset classes such as gold, REITs, and US Treasury bonds proved to be more stable. Flashy news headlines can make it tempting to make knee-jerk decisions, but sticking to a strategy and maintaining a portfolio consistent with your goals and risk tolerance can lead to smoother returns and a better probability for long-term success.

Chart of the Week

Materials companies have underperformed as of late, and the value of the sector has diverged from the value of the underlying commodities in which they primarily operate. Divergences like these tend to be temporary, which will likely prompt an increase in materials companies or a decrease in industrial metal prices.