DOW, NASDAQ, & S&P 500 Push Forward

Posted by: Ryan Kimes, CFP®

Market Update – September 10th, 2019

The Week on Wall Street

Stocks rose last week, with help from two developments: the announcement of further U.S.-China trade talks as well as August hiring and manufacturing numbers that seemed to bolster the argument for a rate cut by the Federal Reserve.  

 

The broad U.S. equity market, as represented by the S&P 500, added 1.79% during a 4-day trading week. The Dow Jones Industrial Average improved 1.49%; the Nasdaq Composite, 1.76%. Foreign shares tracked by the MSCI EAFE index gained 1.69%.[i],[ii],[iii]


09.10.19.jpg

 

Trade Talks Poised to Restart

Trade representatives from the U.S. and China are planning to head back to the negotiating table early next month. This news came Thursday from China’s ministry of commerce, which confirmed a verbal agreement among Secretary of the Treasury Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, and Chinese Vice Premier Liu He.  

 

Formal trade discussions between the U.S. and China last happened in July. China has said that it wants punitive U.S. tariffs on its products removed in the event of a deal.[iv]

 

Weaker Hiring & Manufacturing Data

Payrolls expanded with just 130,000 net new jobs in August, according to the Department of Labor; 25,000 were temp jobs linked to the federal government’s 2020 Census. The main jobless rate stayed at 3.7%. The U-6 rate, which measures both unemployment and underemployment, rose 0.2% to 7.2%.

 

A key gauge of U.S. factory activity, the Institute for Supply Management’s manufacturing purchasing manager index, fell to 49.1 in August. A number below 50 indicates factory sector contraction. Some investors took these hiring and manufacturing reports as hints of a slowing economy, one which the Federal Reserve could potentially try to stimulate with an interest rate cut.[v],[vi] 

      

What’s Ahead

August inflation data arrives this week, and if looks especially mild, it may amount to another suggestion that the Fed should ease. The European Central Bank concludes a meeting on Thursday, and Fed officials will certainly pay attention to its latest policy statement.[vii]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Thursday: A new Consumer Price Index, tracking both monthly and yearly inflation.

Friday: The August retail sales report from the Census Bureau.

 

Source: Econoday / MarketWatch Calendar, September 6, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Thursday: Broadcom (AVGO), Kroger (KR)

 

Source: Zacks, September 6, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i]https://www.wsj.com/market-data

[ii]https://www.wsj.com/market-data

[iii]https://quotes.wsj.com/index/XX/990300/historical-prices

[iv]https://www.cbsnews.com/news/u-s-china-trade-talks-scheduled-for-october-beijing-says-2019-09-05/

[v]https://www.bloomberg.com/news/articles/2019-09-06/u-s-payrolls-rise-130-000-boosted-by-25-000-for-census-count

[vi]https://tradingeconomics.com/united-states/business-confidence

[vii]https://www.cnbc.com/2019/09/06/stocks-look-to-reclaim-their-all-time-highs-in-the-week-ahead.html

 

Stocks React to New Tariffs

Posted by: Ryan Kimes, CFP®

Market Update – August 26th, 2019

The Week on Wall Street

Traders assumed that the week’s biggest news event would be Federal Reserve Chairman Jerome Powell’s speech at the annual Jackson Hole banking conference. Instead, China seized the headlines by announcing new tariffs on U.S. goods.

 

Domestic stocks ended up lower for the week. The Nasdaq Composite fell 1.83%; the S&P 500, 1.44%; the Dow Jones Industrial Average, 0.99%. International stocks posted a weekly gain: the MSCI EAFE benchmark rose 0.96%.[i],[ii]

 


08.26.19.jpg

Beijing Plans New Tariffs

Friday morning, China’s finance ministry stated it would levy import taxes of 5-10% on an additional $75 billion of American imports. One set of tariffs is slated to start September 1, targeting U.S. crops, meats, and seafood. A second set, effective December 15, will put tariffs on U.S.-made cars and car parts. In total, these taxes are scheduled for more than 5,000 American products. 

 

Friday evening, the White House announced two rounds of 5% increases on existing U.S. tariffs on Chinese goods, to be successively implemented on September 1 and October 1.[iii],[iv] 

 

Powell Reflects at Jackson Hole

Friday, Jerome Powell delivered an address on monetary policy at the Kansas City Fed’s annual Jackson Hole symposium. He noted that the global economy currently presented a “complex, turbulent picture,” and added that the Fed was “carefully watching developments” and would “act as appropriate.” 

    

Investors wonder if the central bank will consider another rate cut at its September meeting. Comments from other Fed officials at Jackson Hole did not indicate a consensus on that matter.[v]  

      

Leading Indicators Rise

The Conference Board, the business research group known for its monthly Consumer Confidence Index, also publishes a monthly Leading Economic Indicator (LEI) Index. The Conference Board LEI provides a forward-looking analysis of the health of the business cycle, looking at ten factors ranging from consumer expectations to stock prices to construction activity.

 

In July, the LEI rose 0.5%, following 0.1% descents in May and June. This sudden increase offers optimism at a time when investors are wondering about the momentum of the economy.[vi]

 

Final Thought

Bond prices have risen around the world, leading to lower bond yields. In some instances, yields have turned negative. While the yield on the 10-year Treasury has also declined, it is still above 1.5%, notably exceeding the yields of similar-duration bonds in France, Germany, Spain, and the United Kingdom.[vii]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The Conference Board’s July Consumer Confidence Index.

Thursday: The Bureau of Economic Analysis presents the second estimate of second-quarter economic growth, and the National Association of Realtors publishes new data on pending home sales.

Friday: July consumer spending data from the Department of Commerce, and July’s final University of Michigan Consumer Sentiment Index (a gauge of consumer confidence levels).

 

Source: Econoday / MarketWatch Calendar, August 23, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Autodesk (ADSK)

Thursday: Abercrombie & Fitch (ABF), Best Buy (BBS), Lululemon Athletica (LULU)

 

Source: Zacks, August 23, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i] https://www.wsj.com/market-data

[ii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iii] https://www.cnn.com/2019/08/23/business/china-tariff-products-soybeans-oil/index.html

[iv] https://www.marketwatch.com/story/trump-says-us-tariffs-will-increase-on-chinese-goods-2019-08-23

[v] https://www.marketwatch.com/story/powell-says-fed-carefully-watching-developments-and-will-act-as-appropriate-2019-08-23-10103027

[vi] https://www.conference-board.org/data/bcicountry.cfm?cid=1

[vii] https://www.cnbc.com/2019/08/20/investing-in-the-strange-negative-yield-world-its-very-hard-to-wrap-your-arms-around.html

 

Equity Volatility Continues

Posted by: Ryan Kimes, CFP®

Market Update – August 19th, 2019

The Week on Wall Street

U.S. stock indices saw significant ups and downs last week, with traders looking for economic cues from Treasury yields and also developments in the tariff fight between the U.S. and China.  

 

The S&P 500 lost 1.03% on the week; the Dow Jones Industrial Average and Nasdaq Composite respectively declined 1.53% and 0.79%. Overseas shares also retreated: the MSCI EAFE index lost 2.34%.[i],[ii]


08.19.19.jpg

 

Attention on the Bond Market

Wednesday, the yield of the 2-year Treasury bond briefly exceeded that of the 10-year Treasury bond. When this circumstance occurs, it signals that institutional investors are less confident about the near-term economy. That view is not uniform. Asked whether the U.S. was on the verge of an economic slowdown, former Federal Reserve Chair Janet Yellen told Fox Business “the answer is most likely no,” noting that the economy “has enough strength” to avoid one. 

 

The demand for bonds has definitely pushed prices for 10-year and 30-year Treasuries higher, and their yields are now lower (bond yields usually fall as bond prices rise). The 30-year Treasury yield hit a historic low last week.[iii],[iv]  

      

Some China Tariffs Postponed

Last week, the Office of the U.S. Trade Representative announced that about half the Chinese imports slated to be taxed with 10% tariffs starting September 1 would be exempt from such taxes until December 15.

 

The White House said that the reprieve was made with the upcoming holiday shopping season in mind, so that tariffs might have less impact on both retailers and consumers.[v]

 

Final Thought

Lower interest rates on bonds are now influencing mortgages. According to mortgage reseller Freddie Mac, the average interest rate on a conventional 30-year home loan was just 3.6% last week. That compares to 3.81% roughly a month ago (July 18).[vi]

 

30-year and 15-year fixed rate mortgages are conventional home loans generally featuring a limit of $484,350 ($726,525 in high-cost areas) that meet the lending requirements of Fannie Mae and Freddie Mac, but they are not mortgages guaranteed or insured by any government agency. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment.

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: The minutes of the July Federal Reserve meeting and the latest existing home sales data from the National Association of Realtors.

Friday: Federal Reserve Chairman Jerome Powell delivers a speech at the Fed’s annual Jackson Hole economic conference on monetary policy, and July new home sales numbers arrive from the Census Bureau.

 

Source: Econoday / MarketWatch Calendar, August 16, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Baidu (BIDU), Estee Lauder (EL)

Tuesday: Home Depot (HD), Medtronic (MDT), TJX Companies (TJX)

Wednesday: Analog Devices (ADI), Lowe’s (LOW), Target (TGT)

Thursday: Salesforce (CRM), Intuit (INTU)

 

Source: Zacks, August 16, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 


[i] https://www.wsj.com/market-data

[ii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iii] https://www.cnbc.com/2019/08/15/us-bonds-30-year-treasury-yield-falls-below-2percent-for-first-time-ever.html

[iv] https://www.foxbusiness.com/economy/janet-yellen-to-wall-street-a-recession-is-unlikely

[v] https://www.reuters.com/article/us-usa-trade-china-tariffs/trump-delays-tariffs-on-chinese-cellphones-laptops-toys-markets-jump-idUSKCN1V31CX

[vi] http://www.freddiemac.com/pmms/archive.html

 

Stocks Decline with Interest Rate Announcements

Posted by: Ryan Kimes, CFP®

Market Update – August 6th, 2019

The Week on Wall Street

Last week, the Federal Reserve cut interest rates for the first time in more than a decade, in line with Wall Street’s expectations. Ironically, stocks had their worst week of 2019. 

 

The S&P 500 finished the week 3.10% lower. The Dow Jones Industrial Average and the Nasdaq Composite also posted weekly losses; the blue chips fell 2.60%, while the premier tech benchmark slumped 3.92%. International stocks tracked by MSCI’s EAFE index dipped 1.06%.[1],[2],[3]


08.06.19.jpg

 


Fed Cuts Benchmark Interest Rate

On Wednesday, the central bank reduced the federal funds rate by 0.25%. The latest Fed policy statement noted that “global developments” and “muted inflation” influenced the decision. 

 

Addressing the media, Fed Chairman Jerome Powell described the cut as a “mid-cycle adjustment.” After that comment, Wednesday’s trading session turned volatile on the interpretation that the cut was a “one and done” move, instead of what might be the first in a series.[iv]  

      

More Tariffs Planned

Shares also fell Thursday, after a White House tweet indicated that the U.S. would put a 10% tariff on another $300 billion of goods coming from China, effective September 1.  

 

Practically speaking, this would mean a tariff on nearly all Chinese products arriving in America. So far, the announcement has not affected plans for trade delegates from both nations to continue negotiations in September.[v]

 

The Latest Hiring Data

Payrolls expanded with 164,000 net new jobs in July, according to the Department of Labor. The headline jobless rate stayed at 3.7%; it has now been under 4% for 17 months. The U-6 jobless rate, which counts both underemployed and unemployed Americans, dipped to 7.0%, a level unseen since December 2000.

 

Monthly job growth has averaged 140,000 over the past three months, compared to 187,000 in 2018.[vi]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: The Institute for Supply Management releases its latest Non-Manufacturing Purchasing Managers Index, its monthly gauge of business activity in America’s service sector.

 

Source: Econoday / MarketWatch Calendar, August 2, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Marriott International (MAR), Tyson Foods (TSN)

Tuesday: Walt Disney Co. (DIS)

Wednesday: American International Group (AIG), CVS Health (CVS)

Thursday: Booking Holdings (BKNG), Uber (UBER)

 

Source: Zacks, August 2, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[1]https://www.apnews.com/e15c18b9dbc44efab400d2214e2cb6f9

[2]https://www.wsj.com/market-data

[3]https://quotes.wsj.com/index/XX/990300/historical-prices

[iv]https://www.forbes.com/sites/jjkinahan/2019/07/31/feds-quarter-point-rate-cut-weak-global-growth-trade-tensions-muted-inflation-cited

[v]https://www.cnn.com/2019/08/01/investing/asian-market-latest-trade-war/index.html

[vi]https://www.cnn.com/2019/08/02/economy/july-jobs-report/index.html

Strong Opening Week for the Third Quarter

Posted by: Ryan Kimes, CFP®

Market Update – July 9th, 2019

The Week on Wall Street

U.S. stock benchmarks opened a new quarter positively. The S&P 500 gained 1.65% in the opening week of July; the Dow Jones Industrial Average, 1.21%; the Nasdaq Composite, 1.94%. Overseas, stocks in developed markets, tracked by MSCI’s EAFE index, rose 1.43%.[i],[ii],[iii],[iv]


07.09.19.jpg

On July 3, the S&P posted its latest record close: 2,995.82. In other news, the Department of Labor said that the economy added 224,000 net new jobs in June, far more than the 160,000 projected by analysts in a Bloomberg poll. The headline jobless rate ticked up 0.1% to 3.7% in June; the U-6 rate, including the underemployed, also rose 0.1% to 7.2%. Finally, the Office of the U.S. Trade Representative said that the federal government plans to levy new tariffs on $4 billion of food and beverages coming from the European Union.[v],[vi],[vii]

 

Monday, July 15 will mark the start of the next earnings season. Money-center banks report first, followed by companies from a variety of industries. As Wall Street gets ready for their results, we will take a moment to recap Q2 index performance and the quarter’s two biggest news developments. 

   

Stocks Rose, Fell, and Rose Again

The S&P 500 gained 3.93% in April, dropped 6.58% in May, and climbed 6.89% in June. In the end, it advanced 3.79% for the quarter, outdoing the Q2 gains of the Nasdaq Composite (3.58%) and Dow Industrials (2.59%).[viii],[ix]

 

The Fed Hinted at a Shift in Monetary Policy

The central bank’s June statement took out a reference about being “patient” on borrowing costs and noted that Fed policymakers would “act as appropriate” to try and sustain economic growth. The latest dot-plot, showing the opinions of Fed officials about where interest rates might be in the near future, showed nothing like consensus.[x]

 

U.S.-China Trade Talks Stalled, But May Resume Soon

In May, the U.S. and China announced they would hike tariffs on each other’s exports during the quarter. Formal trade negotiations broke down for six weeks. On June 29, President Trump announced at the Group of 20 summit in Japan that talks would soon resume and that the U.S. would hold off on tariffs slated for another $300 billion in Chinese goods.[xi],[xii]

    

What’s Next

As the quarter gets underway, traders are wondering if an interest rate adjustment and a U.S.-China trade deal are in store for the summer; there is also some ambiguity about the economy’s momentum. Investors will have plenty to consider in the coming weeks.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Federal Reserve Chairman Jerome Powell delivers opening remarks at a conference at the Federal Reserve Bank of Boston.

Wednesday: Fed Chair Powell testifies on monetary policy in Congress, and the Fed also releases the minutes from its June meeting.

Thursday: The June Consumer Price Index appears, showing monthly and yearly changes in inflation.

 

Source: Econoday / MarketWatch Calendar, July 5, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: PepsiCo (PEP)

Wednesday: Bed Bath & Beyond (BBBY)

Thursday: Delta Air Lines (DAL), Fastenal (FAST)

 

Source: Zacks.com, July 5, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

[i] https://quotes.wsj.com/index/DJIA/historical-prices

[ii] https://quotes.wsj.com/index/COMP/historical-prices

[iii] https://quotes.wsj.com/index/SPX/historical-prices

[iv] https://quotes.wsj.com/index/XX/990300/historical-prices

[v] https://www.marketwatch.com/story/sp-500-heads-for-3rd-straight-record-ahead-of-private-sector-jobs-report-2019-07-03

[vi] https://fortune.com/2019/07/05/us-hiring-jobs-data-rebounds/

[vii] https://www.cnn.com/2019/07/02/economy/us-tariffs-on-eu/index.html

[viii] https://money.cnn.com/data/markets/sandp/

[ix] https://www.tradingview.com/markets/indices/quotes-us/

[x] https://www.bloomberg.com/news/articles/2019-06-19/fed-scraps-patient-rate-approach-in-prelude-to-potential-cut

[xi] https://www.piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide

[xii] https://www.bloomberg.com/news/articles/2019-06-29/xi-trump-agree-to-restart-trade-talks-china-says

Equity Growth Slows After Strong Month

Posted by: Ryan Kimes, CFP®

Market Update – July 2nd, 2019

The Week on Wall Street

A month of gains for stocks ended with a weekly retreat. The S&P 500 lost 0.30%; the Nasdaq Composite, 0.32%; the Dow Jones Industrial Average, 0.45%. In contrast, overseas shares, tracked by the MSCI EAFE index, advanced 0.14%.[i],[ii]

Last month was the best June for the blue chips since 1938; the best month for the S&P, since 1955. The Dow gained 6.9% in June, the S&P 6.2%.[iii]


07.02.19.jpg

 Trade Talks Could Soon Restart

All week, investors had one eye on Saturday’s Group of 20 summit in Japan, where President Trump and Chinese President Xi Jinping were slated to meet. This weekend, President Trump announced that he and President Xi had agreed to a resumption of trade talks between the U.S. and China. As part of that agreement, the U.S. is holding off on placing tariffs on an additional $300 billion of Chinese goods.[iv] 

 

While trade tensions certainly remain between both countries, the news that formal discussions could resume may renew investor optimism about progress toward a trade pact. 

      

Powell Cautions Against Adjusting Rates Too Quickly

In the meantime, Federal Reserve Chairman Jerome Powell attracted attention with new remarks on monetary policy. Powell stated last week that the Fed officials were “mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment.”[v]  

 

While many traders think the central bank will lower the benchmark interest rate at its July meeting, Powell noted that there was not yet consensus for a cut among Fed policymakers.[vi]

 

What’s Ahead

This will be a holiday-shortened trading week. The New York Stock Exchange will close early Wednesday, and all U.S. financial markets will close Thursday for the July 4 holiday. Markets reopen on Friday.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: The Institute for Supply Management’s latest purchasing manager index for the factory sector, considered the main barometer of the state of U.S. manufacturing.

Wednesday: Payroll giant ADP’s private-sector employment report for June.

Friday: The June jobs report from the Department of Labor.

 

Source: Econoday / MarketWatch Calendar, June 28, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

No major earnings reports are scheduled for this week.


[i] https://www.wsj.com/market-data

[ii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iii] https://www.foxbusiness.com/markets/us-stocks-wall-street-june-28-2019

[iv] https://www.bloomberg.com/news/articles/2019-06-29/xi-trump-agree-to-restart-trade-talks-china-says

[v] https://www.thestreet.com/markets/feds-powell-suddenly-facing-dissent-says-tk-14998647

[vi] https://www.thestreet.com/markets/feds-powell-suddenly-facing-dissent-says-tk-14998647

Equities Continue Onto Records Highs

Posted by: Ryan Kimes, CFP®

Market Update – June 25th, 2019

The Week on Wall Street

The S&P 500 hit an all-time peak of 2,964.03, in intraday trading Friday, while improving 2.20% across five market days. The Dow Jones Industrial Average and Nasdaq Composite posted respective, 5-day advances of 2.41% and 3.01%. In addition, the MSCI EAFE benchmark of overseas stocks rose 2.58%.[i],[ii],[iii]

 


06.25.19.jpg

A White House tweet and the latest monetary policy outlook from the Federal Reserve sent the bulls running. These were the top two financial news items in an eventful week – a week in which the value of West Texas Intermediate crude rose 9.4%, the price of gold went above $1,400 for the first time in six years, and the 10-year Treasury yield fell below 2%. (Treasury yields fall when their prices rise, and vice versa.)[iv]  

 

The Fed’s June Policy Statement

The central bank stood pat on interest rates this month, but the expectations of some of its policymakers changed. About half of the 17 Fed officials who have a say in monetary policy now project either one or two quarter-point rate cuts by the end of the year. As recently as March, no Fed official saw grounds for a 2019 cut.[v]  

 

Markets interpreted this shift as a sign that the Fed might soon ease. While a rate cut is by no means a given, traders now believe that the Fed will make either a quarter-point or half-point cut at its July meeting.[vi]

      

Last Tuesday’s Market-Moving Tweet

A day earlier, stocks rose after President Trump stated that he and Chinese President Xi Jinping “will be having an extended meeting” at this week’s G-20 summit in Japan.[vii]  

 

Investors were encouraged by this note, sensing a chance for progress in U.S.-China trade talks.

 

Final Thought

With tensions persisting between Iran and the U.S., investors are keeping a close eye on both commodity prices and stock indices. Economic or geopolitical developments could heavily influence the short-term movement of the markets.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The Census Bureau’s snapshot of May new home buying and the Conference Board’s monthly consumer confidence index.

Thursday: The federal government’s third (“final”) estimate of first-quarter gross domestic product.

Friday: May consumer spending data from the Department of Commerce as well as the final June consumer sentiment index from the University of Michigan, another key gauge of consumer confidence.

 

Source: Econoday / MarketWatch Calendar, June 21, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Carnival (CCL)

Tuesday: FedEx (FDX), Micron Technology (MU)

Wednesday: General Mills (GIS), Kraft Heinz (KHC), Paychex (PAYX)

Thursday: Accenture (ACN), Nike (NKE), Walgreens Boots Alliance (WBA)

Friday: Constellation Brands (STZ)

 

Source: Zacks.com, June 21, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i] https://www.cnbc.com/2019/06/21/it-was-a-monumental-week-for-markets-with-major-milestones-in-stocks-bonds-gold-and-oil.html

[ii] https://www.wsj.com/market-data

[iii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iv] https://www.cnbc.com/2019/06/21/it-was-a-monumental-week-for-markets-with-major-milestones-in-stocks-bonds-gold-and-oil.html

[v] https://www.latimes.com/politics/la-na-pol-trump-fed-interest-rate-policy-20190619-story.html

[vi] https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

[vii] https://www.cnbc.com/2019/06/18/trump-says-he-and-chinas-xi-spoke-will-have-extended-meeting-next-week-at-g-20.html

Market Gains Continue Into June

Posted by: Ryan Kimes, CFP®

Market Update – June 18th, 2019

The Week on Wall Street

Stocks advanced for a second straight week. The S&P 500 benchmark rose 0.47%; the Nasdaq Composite, 0.70%; the Dow Jones Industrial Average, 0.41%. Overseas shares, as tracked by the MSCI EAFE developed markets index, added 0.20%.[i],[ii]

 

The market seemed to put its recent preoccupation with trade issues aside, with attention shifting to this week’s Federal Reserve monetary policy meeting. Traders in futures markets now believe the Fed will make a rate cut in July, so its June policy statement will be of great interest.[iii]


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Oil Prices Rollercoaster

Attacks on vessels in the Strait of Hormuz, the busy oil shipping channel, helped to push the price of West Texas Intermediate crude 2.2% higher Thursday, just a day after a 4% fall. Even so, WTI crude lost 2.7% in five days, closing Friday at $52.51 on the New York Mercantile Exchange.[iv]  

 

Investors wondered at mid-week if tensions in the Persian Gulf region would soon impact oil output and transport. Looking beyond the short term, however, the International Energy Agency reduced its 2020 projection for global oil demand.[v]

      

Households Bought More in May

Retail sales rose 0.5% last month, according to the Department of Commerce. Across the year ending in May, they advanced 3.2%. The previously announced 0.2% April retreat was revised into a 0.3% gain.[vi]  

 

These numbers affirm strong household spending this spring. Consumer spending accounts for roughly two-thirds of the nation’s gross domestic product.

 

What’s Ahead

In terms of news, Wednesday offers what may prove to be the biggest economic event of the week: a Federal Reserve policy statement and press conference.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: The Federal Reserve concludes a 2-day policy meeting, with Fed chair Jerome Powell addressing the media afterward.

Friday: The National Association of Realtors releases data on May existing home sales.

 

Source: Econoday / MarketWatch Calendar, June 14, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Jabil (JBL)

Wednesday: Kraft Heinz (KHC), Oracle (ORCL)

Thursday: Kroger (KR), Red Hat (RHT), Darden Restaurants (DRI)

Friday: CarMax (KMX)

 

Source: Zacks.com, June 14, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i] https://www.wsj.com/market-data

[ii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iii] https://www.cnbc.com/2019/06/14/stock-market-middle-east-tensions-weigh-china-data-in-focus.html

[iv] https://www.marketwatch.com/story/oil-prices-steady-as-market-keeps-watch-on-strait-of-hormuz-after-tanker-attacks-2019-06-14

[v] https://www.marketwatch.com/story/oil-prices-steady-as-market-keeps-watch-on-strait-of-hormuz-after-tanker-attacks-2019-06-14

[vi] https://www.cnbc.com/2019/06/14/retail-sales-may-2019.html