International developed equities led the way lower

Euphoria in domestic equity markets unwinds

Market turbulence continued last week in another “sell the winners” week of trading, shortened by the Labor Day holiday. The action was most pronounced in the U.S. equity market, the underperformer again last week (SPX -2.5%), led lower by weakness in tech (CCMP -4.1%) [Figure 1]. Back-to-back weekly declines haven’t occurred in the S&P 500 since early May, although the index is back to where it was one month ago — a reminder of how strong recent performance of U.S. equities has been. International equities had a better week than their domestic peers, with notable strength in international developed market equities (MXEA +1.5%) and strong relative emerging market performance (MXEF -0.7%) [Figure 1].

Last week was another reminder that stocks don’t go straight up all the time. 

Upside momentum continues to build in equity markets as we approach the last week of a very non-standard summer. That makes five weeks of gains for global equities, their longest streak since last Fall.

The S&P 500 had another positive week last week — its fourth in a row and its longest streak since last December. The domestic equity market added 0.8% (SPX) to close Friday at an all-time high just below 3,400 points, and on Monday of this week opened above the psychologically significant 3400 mark. However, the U.S. market was an outlier last week, as overseas markets fell 0.6% (MXWDU), led by weakness in international developed markets, down 1.0% (MXEA). Emerging market equities closed the week 0.1% lower (MXEF) [Figure 1].

It was another slow week for markets as out-of-office replies pile up and volume plunges.  Equities put in another positive week with international developed markets outperforming strongly (MXEA +2.4%) while emerging markets lagged (MXEF +0.4%). Domestic equities landed in between the two. The S&P 500 notched a 0.6% (SPX) gain on the week to close less than 1% from its all-time high.