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Market Bullets - Weekly Update

For the market week ended Friday, June 28, 2019

  • US Equity Markets were mixed last week, as profit-taking ahead of the weekend's G-20 Summit led to slight declines in the S&P 500, while mid-cap and small-cap stocks rose on improved economic hopes. Though down 0.3% for the week, the S&P 500 finished the first half of the year up 17.4%, its best first half since 1997. The Nasdaq also fell 0.3% for the week but remains up a strong 20.7% for the year, while the Russell 2000 (small-cap stocks) rose 0.4% for the week to bring its gains for the year to 16.3%.
  • Global equity markets rose on hopes for some positive movement on trade between the US and China at the G-20 Summit. For the week, Developed Markets increased 0.6% and is now up 12.5% for the year. Emerging Markets ticked up 0.2% for the week on trade hopes, bringing its gains for the year up to 9.2%.
  • US interest rates remain a focal point for investors that are increasingly concerned about an economic slowdown. The yield on the 10-Year US Treasury continued to decline last week, closing at 2.01% vs. 2.06% the prior week. While the market continues to price in a 100% chance of a rate cut in July, the market is predicting a roughly 28% chance of four rate cuts by the end of the year.

Of Interest to Us...

  • Key regional measures of manufacturing activity, which historically have been good predictors of economic growth, all declined notably in June. Specifically, the Empire State Manufacturing Index and the Chicago PMI posted readings that suggest contractions in their respective regions, and the Philadelphia Fed Index was barely positive. We know that the trade rhetoric between the US and China has negatively impacted business confidence, which is now showing up in the data. If indeed tensions ease, will confidence return such that these numbers are just a short-term blip, or does this suggest some caution is warranted?

 

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