For the market ended Friday, June 21, 2019
- US Equity Markets surged last week, with the S&P 500 hitting record highs as investors cheered the Fed's indication that it will likely lower interest rates if economic conditions do not improve. As a result, the S&P 500 rallied 2.2% for the week, bringing year-to-date gains up to 17.7%. The Nasdaq rose a strong 3.0% for the week to bring its gains for the year to 21.0%, while the Russell 2000 (small-cap stocks) increased 1.7% for the week and is now up 15.8% for the year.
- Global equity markets also rallied, buoyed by the Fed and reports that President Trump and Chinese President Xi will be meeting at the upcoming G-20 summit. Developed Markets rose 2.2% for the week to bring gains for the year to 11.8%. Emerging Markets surged 3.8% for the week on the improving trade sentiment and rising energy prices. For the year, Emerging Markets are up 9.1%.
- US interest rates dipped below 2.0% for the first time since 2016 amid expectations of a pending Fed rate cut and concerns about economic activity. The yield on the 10-Year US Treasury ultimately closed the week at 2.06% vs. 2.08% the prior week. The market currently is placing a 100% chance that the Fed lowers rates by 0.25% at its next meeting in July.
Of Interest to Us...
- While the headlines highlight that the S&P 500 hit a record high last week, numerous other indices remain well below their all-time highs. Indeed, the Russell 2000 is roughly 11% from its highs, the S&P Mid-Cap 400 is over 6% from its highs, and key sector indices such as the Dow Jones Transportation Index (11% below) and the Semiconductor Index (over 9% below) also suggest a less robust market. We would like to see these other indices reach highs to confirm broader underlying strength across the equity markets.