Weekly Economic Update: Delta Concerns and Lower GDP

Presented by Nicholas Wealth Management

August 2nd , 2021

Weekly Market Update

In this week’s recap: Stocks open week on big highs, but end with small losses due to Delta concerns and a lower GDP.

The Week on Wall Street

The stock market posted small losses last week despite a very strong showing by corporate America.

The Dow Jones Industrial Average slipped 0.36%, while the Standard & Poor’s 500 lost 0.37%. The Nasdaq Composite index dropped 1.11% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, jumped 1.51%.1,2,3

Stocks Take a Breather

There were plenty of excuses for stocks to retreat last week. News of a new phase in Chinese regulators’ crackdown on large, private-sector companies, a decline in new home sales, and concerns about the Delta variant weighed on investors.

After opening the week adding to record highs, stocks turned lower despite an earnings season that continued to impress.

Solid earnings from the mega-cap technology companies were not enough to propel stocks higher. Instead, stocks slipped throughout the week, fighting uncertainty over Chinese stocks, a disappointing second-quarter Gross Domestic Product number, and a retreat in technology shares they reset to fresh company guidance.

Chinese Crackdown

Chinese technology stocks were under pressure last week as Chinese regulators continued their push to rein in large companies for reasons that include data security, abusive corporate behavior, financial stability, and curtailing private-sector power.

Chinese government actions raised new levels of concerns about which industries may next fall in the crosshairs of regulators. American investors have plenty of exposure to Chinese companies. Substantial losses were felt by mutual funds and hedge funds, which account for about 86% of the holdings in the over 200 U.S.-listed Chinese companies whose aggregate market capitalization exceeds $2 trillion.4

Tip of the Week

We all have impulses that can make us spend more and save less. Recognizing them can help us to improve our financial behaviors.

Media

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CITATIONS:

1. The Wall Street Journal, July 30, 2021

2. The Wall Street Journal, July 30, 2021

3. The Wall Street Journal, July 30, 2021

4. Yahoo Finance, January 7, 2021