It was quite the week as the Dow Jones and Russell 2000 each closed 2.9% higher, the S&P 500 climbed 3.9%, and the Nasdaq jumped 5.3%. All 11 S&P 500 sectors closed higher led by consumer discretionary (+5.2%), information technology (+7.5%), and financials (+3.2%).
The volatile action exhibited thus far in August was precipitated by a July jobs report that stirred concerns about a weakening economic environment and labor market. So, last week’s release of economic data had the market feeling better about the economy and this drove a strong upward bias.
The economic releases last week included the Producer Price Index (PPI) for July, which showed disinflation in total and core PPI, the Consumer Price Index for July, which was in-line with expectations, the Retail Sales report for July, which was much better than expected, and the weekly jobless claim report, which reflected ongoing strength in the labor market. Solid earnings results and commentary about the consumer from Walmart (WMT), along with Cisco’s (CSCO) good quarterly report, contributed to the positive feelings. Investors were feeling so optimistic that Home Depot (HD) closed 3.9% higher last week despite reporting below-consensus guidance.
Alphabet (GOOG) was a notable laggard due to a media report that the Department of Justice may be looking at breaking up the company following last week’s court ruling that Alphabet violated search-related antitrust laws.