Friday, June 18, 2021
LEI Signals Continued Growth
- The Conference Board released its Leading Economic Index (LEI) report for May on Thursday, showing the series rose 1.3% month over month.
- This represents the third straight month in which the index bounced strongly, following a weak winter.
- We examine the data release, as well as its implications for future economic growth, in further detail on the LPL Research blog, available at 12:00 p.m. ET.
U.S. stocks open lower amid increasing concerns about a more hawkish Fed
- The Dow Jones Industrial Average opened lower as it heads for a negative return this week.
- European markets are lower through midday trading as the German Producer Price Index (PPI) came in higher than expected last month.
- Asian markets finished mostly mixed as Japan’s core Consumer Price Index (CPI) unexpectedly turns positive.
The day after
Investors continued to digest the Federal Reserve (Fed) meeting and although the S&P 500 Index was flat Thursday, there were some big developments under the surface.
- Even though the Fed came off as hawkish, the 10-year yield surprisingly fell by 0.06% back to 1.50% yesterday.
- The U.S. Dollar has soared since the Fed meeting, looking at its best week since September 2020.
- As a result of the stronger dollar, gold was hit very hard Thursday, down 4.6% for the worst day since November.
- Commodities in general have had a very rough week on the greenback strength, but also impacting prices, China announced they would start to sell certain industrial metals earlier this week.
- Growth has held up very well since the meeting. In fact, tech was the top sector Thursday, up 1.2%, while energy was down 3.4%, with other cyclical names very weak as well.
- For more of our thoughts on the Fed meeting, please read A Moderately Interesting Fed Meeting.
The S&P 500 closed near flat Thursday, but performance under the surface was as bifurcated as we have seen this year. Technology gained 1.2%, while financials and energy declined 2.9% and 3.5%, respectively. Growth has outperformed value by 7.6% over the past month, but the ratio between the Russell 1000 style indexes is now overbought and approaching a key resistance point which should favor value in the near-term.
Sustainable Investing Becoming Mainstream in Fixed Income
Sustainable investing is becoming more mainstream in fixed income markets and companies that recognize that changing dynamic may be able to avoid financially material impacts. Learn more in this week’s Weekly Market Commentary.
New Highs in Inflation and Stocks
On this week’s LPL Market Signals Podcast, LPL Research looks at the better than expected market highs, inflation concerns, and sustainable investing in the fixed-income market.
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