August 2 to 6, 2021

What happened last week

Stock markets reached record levels, despite an uncertain economic outlook

North America’s benchmark stock indexes pushed higher, with the TSX, Dow and S&P 500 closing the week at record levels. Data pointing to slowly improving economic conditions helped to balance concern over rising global COVID-19 case counts, while buoying market sentiment.

A resurgence of global COVID-19 infections weighed on oil prices

Global crude prices came under pressure, and the demand outlook turned uncertain, as the world’s largest oil-consuming nations grappled with the rapid spread of COVID-19 variants. The U.S. reported 100,000 new cases on Wednesday – the most in six months. China announced travel restrictions and regional lockdown measures, in response to outbreaks across nearly half its provinces. In addition, a closely watched U.S. government inventory report showed that American crude supplies increased by 3.63 million barrels during the previous week – the biggest increase since March. All this comes as the Organization of Petroleum Exporting Countries and its allies (OPEC+) gradually increase supply. After turning in a small gain for July, futures for West Texas Intermediate crude dropped below US$70 per barrel and finished the first week of August down 8%.

Remarks by the Federal Reserve vice-chair added volatility

U.S. stocks experienced a mid-week slump, following reports that the vice-chair of the Federal Reserve (the Fed), Richard Clarida, suggested during a webcast event hosted by Peterson Institute for International Economics, that the central bank was on track to begin raising interest rates in 2023, and that an announcement would come later this year. The remarks once again raised the prospect of the Fed moving up its timeline for reducing its support for the economy faster than markets had anticipated.

Canadian and U.S. economic data pointed to incremental recovery

Data showing strong U.S. service-sector activity helped to take the sting out of weaker manufacturing-growth numbers for July. Early-week reports from the Institute of Supply Management showed that, while growth in factory activity slowed for a second-consecutive month, as suppliers struggled to keep up with demand, the service sector expanded at the fastest pace since 1997. According to IHS Markit data, the pace of Canadian-manufacturing growth was also down in July, but it was still strong through a thirteenth-straight month of expansion.

On Friday, markets digested data showing that employment levels in Canada and the U.S. continued to recover in July, as pandemic lockdowns eased. Statistics Canada reported that the Canadian economy added 94,000 jobs last month and that the unemployment rate fell to 7.5% (from 7.8% in June.) The U.S. Labor Department reported that 943,000 jobs were added to the economy in July – the most in nearly a year and higher than economists had forecast. The U.S. unemployment rate declined to 5.4%, also higher than forecast.

The stock and bond market*
S&P/TSX Composite 20,475.42 0.92% 17.45%
Dow Jones Industrial Avg. 35,208.51 0.78% 15.04%
S&P 500 Index 4,436.52 0.94% 18.12%
NASDAQ Composite 14,835.76 1.11% 15.11%
10-yr GoC Yield 1.24% 0.04% 0.57%
10-yr U.S. Treasury Yield 1.31% 0.07% 0.38%
WTI Crude Oil (US$/bbl) 68.28 -7.67% 40.73%
Canadian Dollar US$0.7968 -0.70% 1.45%
Bank of Canada Prime Rate 2.45%

*Weekly performance ending August 6, 2021. Sources:, and

What’s ahead

U.S. inflation data: On Wednesday, the U.S. Department of Commerce will release inflation data for July. U.S. price levels surged in June – the most since 2008, and higher than the Fed’s 2% inflation target – raising concern that the central bank may reduce its monetary-policy support of the economy sooner than markets expect.

Circle these dates

  • September 6: Canadian and U.S. markets closed for Labour Day
  • September 8: Bank of Canada interest-rate announcement.
  • September 21 to 22: U.S. Federal Reserve meetings and statement

Key take-away

Stay focused on your goals. The fund managers that we partner with understand the markets and have been through uncertainty before. They are equipped with sound strategies, taking an approach that’s designed and proven to outlast market volatility.

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