Markets acquiring new peaks
US stocks rallied last week even though Japan and other emerging markets are reeling under tremendous pressure. The small-cap Russell 2000 Index and the tech-heavy NASDAQ Composite scored record highs, while the S&P 500 touched a five-month high. The S&P 500 rose 1.50% and closed the week at 2,801.31. The Dow Jones Industrial Average rose 2.30% to 25,019.41, while the NASDAQ Composite rose 1.79% to 7,825.98. The US ten-year Treasury yield remained flat at ~2.83% for a second week in a row.
Financials lagging broader markets
Even though the broader markets recorded new highs, US financials continued to disappoint. The S&P Financials Index rose 1.14% to 447.65, while the S&P Insurance Select Industry Index rose 0.76% to 2,757.98.
Bank equities (XLF) have underperformed this year despite a strong economic recovery, a rise in interest rates, and deregulation. JPMorgan Chase (JPM), which posted a record second-quarter profit, was the top gainer last week with a 2.21% jump. Morgan Stanley (MS) rose 2.10% followed by Goldman Sachs (GS) and U.S. Bancorp (USB). Wells Fargo (WFC), which reported lower-than-expected earnings for the second quarter, was the biggest loss at 0.95%. Citigroup (C) shares fell 0.21% after the bank reported weaker-than-expected quarterly revenues.