Only one of the eleven sectors finished July in the red: Technology, which fell 3.3%. Value stocks were the star of the show in July as investors rotated out of growth and tech names. Both small and large-cap value equity styles performed better than their growth counterparts. The top three sectors in July were value-oriented sectors: Real Estate, Utilities, and Financials, which posted respective gains of 7.2%, 6.8%, and 6.4%.
Inflation fell below 3% for the first time since June 2023, breaking through the 3-4% range it been hovering in for the last twelve months. Unemployment rose for the third straight month, though labor force participation rose and job growth continued to remain relatively stable even in a high interest rate environment. Both new and existing home sales fell again in July reports as the U.S. median existing home sales price set another all-time high.
Treasury yields continued to fall with the middle of the curve posting the largest MoM declines. The 2-year and 3-year Treasury notes endured the largest decline on the curve; each duration shed 42 basis points in July, while both the 1-year and 5-year notes each fell 36 basis points.
Bond funds benefitted from added gains as a result of the lower yields. The iShares 20+ Year Treasury Bond ETF (TLT) advanced 3.6% and the AGG rose 2.4%, the largest increases of any bond fund tracked on our chart (below).
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