Markets Weekly Recap

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Key Takeaways

• Record-setting performance for Dow Jones and S&P500 defines the week in stock trading
• Gold tumbles 5% to kick off the week but fully recovers, bitcoin zeros in on $47,000

Another week of record closing levels across the board went by as market participants digested a flurry of economic data. A major political milestone arrived Tuesday, key inflation data turned out not as high as feared, and initial jobless claims fell for a third straight week. All key economic data this week served as signals the economic recovery in the US stays on an upward trajectory.

Major stock indexes traded to the upside this week, prompted by renewed risk appetite and elevated market optimism. Bolstering prospects for economic expansion, the US Senate on Tuesday approved the highly-anticipated $1tn infrastructure package. The legislation, intended to fix bridges and roads, and to improve public transit and broadband internet, is now headed to the House of Representatives.

Moreover, in signs of the continued economic rebound, July’s core inflation reading came in at 0.3% on a monthly basis, lower than the 0.4% expected by economists. Core prices, which exclude the often-volatile categories of energy and foods, are largely considered a more reliable indicator for the movement of prices.

European Markets Experience a Good Week

All-items inflation came in at 5.4% and did surpass expectations of 5.3% but investors did not seem concerned as they were eager to jump into economically-sensitive stocks, particularly those poised to benefit from spending on infrastructure. Among the biggest winners, this week were shares of material firms, industrials, and banking firms.

On Thursday, new claims for jobless benefits totaled 375,000 for the week ended August 7. The figure matched estimates from economists surveyed by Dow Jones. The fresh report on unemployment benefits suggested the economy remains on track to recovery for another week. The optimistic report arrived a week after the latest upbeat jobs report, which showed the labor market grew by 943,000 new jobs in July.

European markets also fared remarkably well. The pan-European Stoxx 600 kept going up throughout the week, setting new record highs along the way. Major European economies also performed well, propelled higher by investors’ optimism over the robust economic expansion.

Gold prices endured a major downfall on Monday. To kick off the weekly trading, the precious metal slipped as much as 5%, the biggest single-day slide since November 2020. Prices fully recovered by Friday.

The cryptocurrency market this week briefly surpassed the $2tn valuation milestone. Bitcoin reached a weekly high on Wednesday when price climbed to levels near $47,000 per coin.