Economic news for the week included another quarter-percent policy interest rate cut by the Federal Reserve, a seasonal rise in jobless claims, and stronger-than-expected job openings data.

Equities were mixed globally, with U.S. value and small caps among the strongest. U.S. bonds pulled back for the most part, along with higher interest rates across the yield curve. Commodities were mixed, with stronger metals and weaker energy.

U.S. stocks were mixed last week, with a pullback in the large cap growth segment, offset by gains in more cyclical value and small caps, in line with a less hawkish Fed than was initially expected. By sector, returns were strongest in materials and financials, each up over 2%, while communications and technology lagged, declining by -2% to -3% (mostly via negative contributions from Intel and Nvidia). In the latter, investors showed some nervousness after the announcement that the U.S. administration is easing export curbs on fairly high-end H200 semiconductors to China. Higher technology company valuations also appeared to be a bit of a concern, as AI favorite Oracle reported weaker revenue but also higher expected capex spending than markets anticipated.

Foreign stocks were also mixed, with gains in Europe and Japan offsetting declines in emerging markets. Several ECB members made positive comments about the growth trajectory in the eurozone, which pointed to continued expectations for no policy action this coming week. Within EM, Brazil, Mexico, and Turkey all rose several percent (the latter in line with a central bank rate cut of -1.5% to 38.0%), along with positive sentiment around higher commodities prices for the first two, in contrast to declines of a few percent in China and India. Large index components South Korea and Taiwan also fell, along with their usual high correlation to U.S. technology stocks, which pulled back last week.

Bonds fell back last week as interest rates ticked higher, along with expectations that the Fed might not cut rates as much as initially hoped for in 2026. U.S. Treasuries and investment-grade corporates performed similarly, and were outperformed by positive returns for floating rate bank loans. Foreign bonds were mixed as well, in keeping with a half-percent drop in the value of the dollar.

Commodities were down on net last week, as gains in precious metals were offset by substantial declines in energy. Crude oil prices fell over -4% last week to $57/barrel, as U.S. oil rig count grew, along with ongoing fears of a supply glut. Natural gas prices also plummeted by over -25%, a product that tends to be driven by weather changes this time of year.

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.