Macro Overview
U.S. equities finished lower on Monday, taking a breather after last week’s significant rally. The pullback was seen as a consolidation of recent gains, which were fueled by rising expectations of a September interest rate cut from the Federal Reserve. The S&P 500, as tracked by IVV, declined by -0.44%, though it remains up 15.79% over the past year. Selling was widespread but most pronounced in defensive and growth-sensitive areas. The Consumer Staples sector (XLP) was the day’s worst-performing group, falling sharply by -1.71%, pushing its one-month return into negative territory at -0.54%. Small-Cap Growth stocks (IJT) also faced significant pressure, shedding -1.17% on the day.
U.S. Size & Style
It was a risk-off day across the U.S. size and style spectrum, with all nine categories finishing in the red. Small-Cap Growth (IJT) was the notable laggard with a -1.17% loss, though it has still gained an impressive 10.84% over the past three months. Large-Cap Growth (IVW) held up the best, declining only -0.16% and preserving a strong 22.85% one-year return. In terms of fund flows, the Invesco QQQ Trust (QQQ) experienced a significant one-week outflow of $3.68 billion, but has attracted $17.23 billion over the past year. Conversely, while the iShares Russell 2000 ETF (IWM) saw a notable one-week inflow of $1.87 billion, it has experienced outflows of $5.66 billion over the last twelve months.
U.S. Sectors & Industries
Sector performance was decidedly negative, with nine of the eleven S&P sectors closing lower. Consumer Staples (XLP) posted the steepest decline at -1.71%, followed by Health Care (XLV) which dropped -1.43%, extending its one-month loss to -0.21%. On the positive side, Communication Services (XLC) and Energy (XLE) were the only sectors to eke out gains, rising 0.16% and 0.26%, respectively. The industry landscape reflected this weakness, with Biotechnology (XBI) falling -2.34%. In contrast, Oil & Gas Exploration & Production (XOP) was the top-performing industry, gaining 1.04%. Technology ETFs like VGT, which led weekly inflows by attracting $3.2 billion, have seen robust demand all year, with one-year inflows totaling $10.78 billion.
Global Thematic
Thematic ETFs saw widely divergent performance. Cannabis was the standout theme, with ETFs like MJ and CNBS soaring 6.44% and 5.27%, respectively. On the other end of the spectrum, health-focused themes struggled, with the ARK Genomic Revolution ETF (ARKG) falling -2.02%. Clean energy themes also faced headwinds, as the iShares Global Clean Energy ETF (ICLN) dropped -1.91%. Within the Evolving Consumer theme, the iShares U.S. Home Construction ETF (ITB) was a bright spot for flows, attracting $157 million over the past week.
Developed Markets ex-U.S.
International developed markets broadly declined, pulling back from strong longer-term performance. European equities faced the most pressure, with the iShares MSCI France ETF (EWQ) falling -2.76%, which turned its one-month performance negative to -1.74% even as it maintains a 22.44% gain year-to-date. The broad Developed Markets ex-U.S. ETF (EFA) closed down -1.32% but has delivered a strong 6.30% return over the past three months. A notable exception was Hong Kong (EWH), which managed a slight gain of 0.14%.
Emerging Markets
Emerging markets presented a mixed picture. Latin America saw diverging paths as Brazil (EWZ) gained 0.45%, adding to its strong 6.68% one-month return, while Mexico (EWW) slumped -1.74% after a powerful run that has seen it gain 34.19% year-to-date. China-focused A-share ETFs were among the day’s leaders, with the KraneShares Bosera MSCI China A 50 Connect Index ETF (KBA) rising 1.07%. The broad iShares MSCI Emerging Markets ETF (EEM) posted a loss of -0.57% but has a three-month return of 9.93%.
Fixed Income
Fixed income markets were generally down on Monday. The iShares International Treasury Bond ETF (IGOV) was the worst performer in the space, declining by -0.85%, which contrasts with its 9.37% year-to-date gain. High-yield corporate bonds (HYG) also saw weakness, falling -0.20%, a minor dip compared to their 7.71% return over the past year. In a sign of investor caution, Taxable Ultrashort bond ETFs like BIL saw continued demand, while longer-duration assets like the iShares 20+ Year Treasury Bond ETF (TLT) experienced significant one-week outflows of $417 million and have seen outflows of $8.48 billion over the past year.
Commodities
The commodity complex was mixed. Energy futures led the way, with WTI Crude Oil (USO) climbing 1.49%, building on an 11.41% gain over the past three months. In contrast, precious metals retreated, weighed down by a stronger dollar. Palladium (PALL) was the biggest laggard, plummeting -2.42%, while Silver (SLV) fell -0.91%. Despite the daily drop, silver has returned 28.75% over the past year. Gold ETFs (GLD) saw the largest one-week outflows in the commodity space at $400 million, but have attracted over $10 billion in the past year.
Cryptocurrency
Digital assets experienced a sharp sell-off to start the week, cutting into impressive long-term gains. Bitcoin, as tracked by IBIT, fell -5.09% but is still up 73.32% over the last twelve months. Ethereum-related products saw even steeper losses, with the iShares Ethereum Trust ETF (ETHA) dropping -8.58%, though it maintains a 60.35% one-year return. The entire crypto segment saw substantial one-week outflows of over $1 billion, reflecting a clear risk-off sentiment in the asset class.
What to Watch Today
Investors will be closely watching a slate of key economic data releases today. The agenda includes Durable Goods Orders for July, the S&P Case-Shiller Home Price Index, and the FHFA House Price Index for June. However, the main event will be the Conference Board’s Consumer Confidence report for August. This report is a critical barometer of consumer sentiment and spending intentions. A stronger-than-expected reading could signal economic resilience, while a weak number might amplify concerns about a slowdown, further influencing the Federal Reserve’s outlook on interest rates.
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This report is for informational purposes only and should not be considered investment advice. This report was generated with assistance from AI.
