Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

The economic data were mixed, but generally consistent with moderate growth in the near term. The estimate of 1Q19 GDP growth remained at 3.1%, but consumer spending growth for the first quarter was revised down, while business fixed investment was revised up. Monthly figures showed a sharp rebound in consumer spending growth in 2Q19, but that’s not much of a stretch following a weak 1Q19 (the average for the first half of the year was moderate). The Conference Board’s Consumer Confidence Index and the Chicago Business Barometer each fell, and both reports cited an impact from tariffs.

Investors continued to look beyond the economy data, turning somewhat optimistic that we’ll see progress toward a U.S./China trade deal. Fed policy expectations for July were tempered (a 25-basis-point cut is fully factored in, but the odds of a 50-basis-point move have decreased).

Next week, we can expect financial market participants to react to the weekend’s trade policy news. There are plenty of important economic data reports, although trading volumes may be thin around the Fourth of July holiday. There is always statistical noise in the monthly payroll figures, but seasonal adjustment is more difficult in June due to the end of the school year and the start of the summer travel season. Keep an eye on the Challenger Job Cut Report, which tracks announced corporate layoff intentions. These aren’t actual layoffs, but they have been trending somewhat higher this year and could give an early indication of softer job market conditions. The Fed will release its semiannual Monetary Policy Report to Congress on Friday (ahead of Powell’s testimony in the following week).


Indices
Last Last Week YTD return %
DJIA 26526.58 26753.17 13.71%
NASDAQ 7967.76 8051.34 20.08%
S&P 500 2924.92 2954.18 16.68%
MSCI EAFE 1913.83 1918.39 11.28%
Russell 2000 1546.55 1563.50 14.68%


Consumer Money Rates
Last 1 year ago
Prime Rate 5.50 5.00
Fed Funds 2.37 1.90
30-year mortgage 3.82 4.66


Currencies
Last 1 year ago
Dollars per British Pound 1.267 1.308
Dollars per Euro 1.137 1.157
Japanese Yen per Dollar 107.79 110.49
Canadian Dollars per Dollar 1.310 1.325
Mexican Peso per Dollar 19.126 19.717


Commodities
Last 1 year ago
Crude Oil 59.43 73.45
Gold 1412.00 1251.00


Bond Rates
Last 1 month ago
2-year treasury 1.74 2.00
10-year treasury 2.01 2.16
10-year municipal (TEY) 2.49 2.58


Treasury Yield Curve – 06/28/2019
Chart
As of close of business 06/27/2019


S&P Sector Performance (YTD) – 06/28/2019
Chart
As of close of business 06/27/2019


Economic Calendar
July 1  — ISM Manufacturing Index (June)
July 2  — Motor Vehicle Sales (June)
July 3  — Challenger Job Cut Report (June)
 — ADP Payroll Estimate (June)
 — Jobless Claims (week ending June 27)
 — Trade Balance (May)
 — Factory Orders (May)
 — ISM Non-Manufacturing Index (June)
July 4  — Independence Day Holiday (markets closed)
July 5  — Employment Report (June)
 — Monetary Policy Report to Congress
July 10  — Powell Monetary Policy Testimony (House Financial Services)
July 31  — FOMC Policy Decision
September 18  — FOMC Policy Decision

 

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor’s returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business June 28, 2019.

By | 2019-07-01T12:56:34+00:00 July 1st, 2019|Latest Articles, Weekly Market Snapshot|