Stocks sold off this week while bonds climbed higher. The action was choppy this week as the market had plenty of economic news to react to from inflation data, higher retail sales, and consumer sentiment. Big names in large caps took a rest this week and pulled the index down with them. Small caps took the greatest heat this week with the S-fund sliding 4.13% on the week. Small cap performance reflects the action of most stocks but its the big name stocks that have kept large caps from straying too far from their highs. The market did spend time in positive territory early in the week but a sharp sell-off Friday solidified losses across the TSP stock funds for the week.
The spotlight this week was on various economic data and growing concerns of Delta variations of Covid-19. Inflation data was higher than expect even with expectations already higher than the Fed's target inflation rate. Federal Reserve President Jerome Powell gave a testimony to both the House and Senate this week following the high inflation data. Powell is sticking to the transitory outlook on inflation and assures that the Fed will stay accommodative for as long as necessary. The Delta variant of Covid-19 is affecting various pockets of the world; some of which with large economies. This development has investors concerned about a slow down in the global economic recovery from the worst times of the Covid outbreak.
Bonds were up this week and yields continue to drop. Despite the U.S. economy accelerating in growth and rising inflation, bonds have been a destination for new money over the last three months. The F-fund led the TSP funds with a 0.25% gain.
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Here are the weekly, monthly, and annual TSP fund returns for the week ending July 16:
The SPY (S&P 500 / C-fund) produced new all time highs early in the week pushing above resistance but the selling pressure ensued late in the week following the pressure of concerning economic data and uncertainty of the future. The index slid to just above its 20-day EMA Friday. The C-fund fell 0.96% for the week.
The Dow Completion Index (S-fund) closed at its lows three days this week. The index slipped below its 50-day EMA Wednesday and fell further from there. The index closed just off its lows for the week. The S-fund lagged the TSP funds with a 4.13% loss.
EFA (EAFE Index / I-fund) gapped down mid-week to open a new gap and to move below its 50-day EMA. The index fell further later into the week also closing just off its lows for the week but closed an open gap from the previous week in the process. The index may have a trading channel and although the channel falling it makes for good swing trading. The I-fund was down 1.16% for the week.
BND (Bonds / F-fund) fell to its 20-day EMA early this week and filled a gap in the process. The 20-day EMA held as the low for the week and the index reversed direction and rose to fill a gap from the previous week. The F-fund led the TSP funds with a gain of 0.25%.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
www.tsptalk.com
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