Stocks reverse earlier losses after Powell testimony. Federal Reserve (Fed) Chairman Jay Powell testifies on Capitol Hill today, starting with the House followed by the Senate tomorrow. In his prepared statement released this morning at 8:30am ET that markets interpreted as dovish, Powell repeated his signaling for a July cut based on slower growth, trade uncertainty, and other policy risks, amid low inflation, while leaving the door open to additional rate cuts later this year. Fed funds futures are fully pricing in a July rate cut three weeks from today, and near 90% probability of a second 0.25% cut by year end, but a 0.5% cut this month remains very unlikely in our view. Treasuries rallied on the news while the dollar sold off. The minutes from the Fed’s June policy meeting, due to be released later today, are unlikely to bring any new news.
New Market Signals podcast. Listen to this week’s episode, in which Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick discuss what could happen in the second half of 2019, current economic trends, and Federal Reserve policy. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts!
Let’s talk about pullbacks. Market pullbacks, corrections, and bear markets can happen frequently, as history has shown. The S&P 500 Index hasn’t dealt with much downside volatility in 2019, so chances are U.S. stocks could sell off before the year is over. However, S&P 500 pullbacks can act as springboards for long-term gains when sound economic fundamentals stay intact (as we believe they will). We’ll examine the history of non-recession stock pullbacks in today’s LPL Research Blog post.
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