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LivestreamMenuWhile the market finished Friday’s session higher , it wasn’t enough to overcome a losing week. The S & P 500 and Nasdaq Composite snapped a three-week advance, seeing five-day losses of more than 1% and roughly 2%, respectively. The Dow Jones Industrial Average dropped about 1%, its straight weekly decline. Here’s what weighed on the market this week: Bonds in driver’s seat Sovereign bond yields were the major catalyst for the week’s pressure. On Tuesday, yields around the world jumped to multi-year highs as fears around inflation and government borrowing, among others , plagued investors. Yields declined Wednesday after the Treasury Department pledged to at least double government debt buybacks in the next few months, before rising again the next day, with the 30-year Treasury bond yield all of Wednesday’s decline. Long yields continued to rise Friday. “We can’t cross 40 trillion in debt and have the Federal Reserve with a massive balance sheet and expect that rates can come down in the face of a good economy,” said Leo Kelly, founder and CEO of Verdence Capital Advisors. “This is going to be an ongoing tug of war on these rates now.” “You have to fix the addiction to spending in government,” he continued. Conflict in the Middle East only adds to the pressure on bonds. So long as the conflict there rages, fueling inflation thanks to higher energy prices, that will further drive up yields, according to Adam Phillips, managing director of investments at EP Wealth Advisors. The Treasury Department’s buyback operation is “not the cure to what ails the bond market,” Philips said. Signs of lower consumer spending Walmart contributed to the downdraft on Thursday, when its shares saw their worst one-day slump in more than four years after country’s largest brick-and-mortar retailer said U.S. same-store sales growth in the second quarter fell short of Wall Street expectations. Even excluding the damage from new caps on drug prices, Phillips said Walmart gave other causes for concern. “No matter how you slice it, this wasn’t a great quarter for Walmart,” he said. “They’re seeing an increasingly selective buyer who is extremely cost conscious, and I expect us to remain in that environment, especially as we see sustained oil prices that remain elevated.” Walmart is an economic bellwether, he noted. “They provide a really good insight into what that lower part of the K is doing,” Phillips said, referencing the so-called K-shaped economy . Static U.S.-Iran war The Middle East war also dominated headlines after a 60-day peace window expired earlier in the week without the U.S. and Iran reaching an agreement. While Iran’s president reportedly signaled a desire for the war to end , oil prices increased as Washington threatened economic pressure on the country, with President Donald Trump saying in a post on Truth Social that “this will be Economic Warfare and Isolation on an unprecedented scale.” The U.S. kept up a blockade of Iranian ports and Iran continued intermittent attacks on maritime traffic. “We’re back to watching the negotiations in real time,” Jason Stephens, founder at Evertern Wealth, told CNBC. With the midterm elections in less than 11 weeks, he believes the Trump administration will feel a growing push to get something done over the next month or so.Read More
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