June 24 – June 28 Week in Review
The S&P 500 declined 0.3% last week, but still increased 6.9% for the month to record its best June since 1955. The Dow Jones Industrial Average, down 0.5%, and the Nasdaq Composite down 0.3% for the week, trimmed their monthly gains to 7.2% and 7.4%, respectively. The small-cap Russell 2000, up 1.1%, played catch-up, increasing its monthly advance to 6.9%.
Last week’s price action reflected some consolidation in front of the G-20 meeting between President Trump and President Xi.
Laggards last week included the defensive-oriented S&P 500 real estate, utilities, health care, and consumer staples sectors. Outperformers included the materials and financials sectors. The Philadelphia Semiconductor Index climbed higher, bolstered by better than expected guidance from Micron and hope for a trade agreement.
There was no shortage of headlines and speculation leading up to the G-20 summit, which at the time of this writing was still in progress. If the consensus view holds true, then more headlines and speculation should be expected. The market was expecting President Trump and President Xi to agree to continue talks and hold off on any additional tariffs, which would placate the market while it continues to assess monetary policy.
St. Louis Fed President James Bullard had the market re-thinking its rate cut expectations after he said he didn't think it was necessary to cut the fed funds rate by 50 basis points. Instead, he favored a 25 basis points reduction. This stance from one of the Fed's most vocal doves, who was also the lone dissident in this month's FOMC meeting, tempered growing hopes for a 50 basis points cut at the Fed’s next meeting.
It's still widely expected that the Fed will cut rates, though. Muted inflation pressure indicated in the Fed's preferred inflation gauge, the PCE Price Index, and weakening regional PMI readings were the latest data points to assure the market's thinking.
U.S. Treasuries continued to advance, sending yields lower across the curve. The 2 year yield declined ten basis points to 1.74%, and the 10 year yield declined eight basis points to 2.00%.
In key corporate news last week, Boeing disclosed that the FAA asked it to address a risk that its 737 software patch overlooked, pushing back Boeing's timeline for a fix by another three months. AbbVie announced it will acquire Allergan for about $63 billion.
In other markets the U.S. Dollar Index was unchanged at 96.18. WTI crude advanced 1.8% to $58.38 a barrel amid bullish inventory data and lingering U.S.-Iran tensions.
July 1 – July 5 Economic Calendar