- The Russell 2000 index gained 6.7% month-to-date through Friday
- Retail sales excluding automobiles and gasoline rose 0.8% in June
- The U.S. Leading Economic Index declined 0.2% in June
Top Three Market Headlines
Small Cap Stocks Start Strong in July: After lagging large capitalization stocks by a wide margin over the first half of the year, small capitalization stocks have rallied to start the second half. The small cap Russell 2000 index outperformed the S&P 500 index last week for the second straight week, and through Friday had recorded a 6.7% month-to-date return, versus 0.9% for the S&P 500. Over a five-day trading period between July 10 — July 16, the Russell 2000 beat the S&P 500 by almost ten percentage points during trading, the widest five-day outperformance on record (since 1986).
Retail Sales Flat in June: The U.S. Census Bureau reported last week that U.S. retail sales remained unchanged in June on a month-to-month basis, a slowdown from the +0.3% pace seen in May. The overall level of sales was repressed, however, by meaningful declines at auto dealers (-2.3%) and gas stations (-3.0%). Excluding those two categories, sales rose 0.8% on the month, the strongest rate since January 2023. Areas of strength in June included online sales (+1.9%), building materials (+1.4%), drug stores (+0.9%), and furniture stores (+0.6%).
Leading Indicators Decline Again: The Conference Board's U.S. Leading Economic Index (LEI) fell by 0.2% in June, the fourth straight monthly decline. Factors weighing on the index included downcast consumer sentiment, weak new orders, and an increased number of unemployment claims. While the LEI dropped 1.9% over the six-month period through June, The Conference Board noted that the rate of decline became progressively smaller in recent months, an encouraging trend. Based on the latest LEI readings, the organization projects that real (inflation-adjusted) gross domestic product growth will slow to around 1% (annualized) in Q3 of this year.