Monday Morning Market Insights: Last Week in Review with Rusty Vanneman, Vol. 19

Happy Monday!

Markets Update 

It was another fascinating week in the economy and markets last week. As for the overall stock market, despite a mid-week swoon (at one point the market was down 4% for the week), in the end it lost just over 1%. One asset class that did have gains last week were commodities (Morningstar Commodity Index +2.1%).

The overall U.S. market is now down for the month of May (less than 1%), but still up nearly 5% for the quarter and up nearly 11% for the new year.

There has been notable dispersion in returns within the market though, with the asset classes that should perform better in an inflationary environment (such as commodities, value stocks) outperforming. Speaking of dispersion, did you know that the Technology sector has now underperformed the S&P over the last year? Hard to believe. Related to the last point, last week was also the 3-month anniversary (Feb 12) when the most high flying stocks and ETFs in the market (think like ARK funds) peaked in relative performance terms. 

Deeper Dive

One driver of recent relative performance is the concern about inflation. Inflation indeed remains a top headline in the financial press and a leading question among investors. Plenty of sensational headlines last week including both Consumer Price Index (CPI) and Producer Price Index (PPI) both coming in above expectations. Some of the more notable headlines were PPI up 6.2% year-over-year – its highest level in more than a decade! CPI up an annualized 7.2% over the last three months. Core CPI prices rose in April at the largest monthly rate since 1982. 

For some potential Orion Portfolio Solutions strategy ideas to fight inflation, check out this recent Portfolio Recipes webinar.

Given the inflation news, it wasn’t a surprise that interest rates rose last week. Yet, the 10-year Treasury only rose from 1.60% to 1.63% last week (hitting a closing high yield of 1.69 mid-week). This is still below the high of 1.74% from March. If you ask me, given the growth/inflation news, interest rates have been well behaved this year.   Corporate bond yields have too – both of these are big pluses for the stock market.

One “inflation-fighter”, however, is a having a tougher time. Cryptocurrencies have been on the slide, with Bitcoin even dropping nearly a third off its all-time highs earlier this year.

Breaking Down Breadth 

One current market positive, in my opinion, is market “breadth.” In short, it’s a good sign for the market when gains are broad-based and not just concentrated in relatively few names. Well, one could say that is what we have this year. The market is up 11% while the average stock is up 19%. So far, so good. 

Here is where the concept of breadth this year gets a little weird though. There are a couple key market indices to look at. First, the NASDAQ index does not show good breadth. That shouldn’t be a surprise given the aforementioned tech sector’s relative weakness. The second index, however, is the Russell 2000, which is a benchmark for small cap stocks. Usually, when breadth in the market is strong, small caps are performing well. This isn’t happening now. 

In fact, over the last 3 months, small caps are only up 2% while the overall market is up 4%. What should be noted, however, is that small cap value is up about 19% during that time frame! So, this brings us back to the prior point that the most high flying small cap growth names “broke” 3 months ago, while companies levered to positive economic growth (and inflation) are still performing quite well. Add it all up, I believe one could still count breadth and “don’t fight the tape” as bullish signals for the stock market. 

Bottom line, given the improving economy, and massive government support for the economy and markets, the outlook still appears bright. Nonetheless, diversifying broadly is still wise counsel.

Earnings & Economic Data

Earnings season is almost over. Over 90% of the S&P 500 has reported and 86% have reported positive earnings.  Earnings growth is over 50% for the quarter. Next quarter is expected to be ever better – estimated earnings growth of over 60%.

Last week was loaded with economic data. This week, not so much. Housing data will get the most attention this week. The Federal Reserve does release some minutes from their prior meeting Wednesday, which might give some clues on future interest rate policies. I’m not expecting much.

For more resources on the economy and markets, including Partner content, please review the Orion Portfolio Solutions Financial Advisor Success Hub.

As always, please let me know if you have any feedback or questions. You can reach me by emailing

Have a great week!



The CFA is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute — the largest global association of investment professionals. To learn more about the CFA charter, visit

The CMT Program demonstrates mastery of a core body of knowledge of investment risk in portfolio management. The Chartered Market Technician® (CMT) designation marks the highest education within the discipline and is the preeminent designation for practitioners of technical analysis worldwide. To learn more about the CMT, visit

About Rusty Vanneman, CFA, CMT
Rusty Vanneman serves as the Chief Investment Strategist for Orion Advisor Solutions. An industry veteran with more than 30 years of investment experience, Rusty creates relevant market- and platform-related content that supports deeper, more engaging conversations with advisors and investors, educating key internal and external audiences on Orion Portfolio Solutions’ strategies and resources to help deliver favorable investor outcomes, and helps identify new investment offerings to meet growing marketplace demand. Rusty is a host of Orion’s The Weighing Machine podcast and authored the book “Higher Calling: A Guide to Helping Investors Achieve Their Goals.” Rusty has also managed multiple mutual funds and hedge funds during his career and was named one of the Top 10 Portfolio Managers to Watch by Money Management Executive in 2017. Prior to Orion’s acquisition of Brinker Capital in 2020, Rusty was the Chief Investment Officer for Orion Advisor Solutions and prior to that was the President and Chief Investment Officer of CLS Investments. Before joining Orion in 2012, Rusty served as the Chief Investment Officer and Managing Director for a multi-billion-dollar registered investment advisor (Kobren Insight Management) in the greater Boston area. His 11-year tenure at the RIA included a five-year span when the firm was owned by E*TRADE Financial where he also served as the Senior Market Strategist for E*TRADE Capital. Prior, Rusty was a Senior Analyst at Fidelity Management and Research (FMR Co) in Boston. Additional work experience includes Thomson Reuters, General Electric, and as a cattle ranch hand in the Nebraska Sand Hills. Rusty received his Bachelor of Science in Management from Babson College in Wellesley, Massachusetts, where he graduated with high distinction. He holds the Chartered Financial Analyst (CFA®) designation and is a member of the CFA Institute. He is also a Chartered Market Technician® (CMT) and is a member of the Market Technician’s Association (MTA).