Earnings season is here again, as we’ll get reports from 57 S&P 500 Index companies over the next five days.
Stocks Reach New Milestones as the Fed Stays Accommodative
US: S&P 500 Index +0.8%, Dow +1.5%, Nasdaq +1.0%
Europe: STOXX Europe 600 -0.8%, German DAX -2.0% France CAC 40 -0.4%, U.K. FTSE 100 -0.6%
Asia: Japan Nikkei -0.3%, China Shanghai Composite -2.7%, Korea KOSPI -1.1%
Rates/Commodities: 10-Year Treasury yield +8 basis points to 2.12%, WTI crude oil +5.5%, COMEX gold: +0.4%
Overall, U.S. stocks had an uneventful week in terms of volatility, with major indexes gaining less than one percent. The Dow Jones Industrial Average did close above 27,000 for the first time, while the S&P 500 Index and Nasdaq Composite also reached fresh highs. Continue reading
“Don’t fight the Fed.” — Marty Zwieg
After Federal Reserve (Fed) Chair Jerome Powell’s congressional testimony this week, it appears at least a 25 basis point (.25%) cut is in the cards on July 31. This would be the first rate cut since 2008, and it would come after nine consecutive 25 basis point hikes beginning in December 2015.
Dovish Fed comments support global equity markets. Federal Reserve (Fed) Chair Jerome Powell’s testimony to Congress yesterday and the release of the minutes from the Fed’s June policy meeting confirmed that the Fed is eyeing a potential rate cut in July to insulate the economy against shocks from trade and slowing global growth. Continue reading
Fed fund futures are pricing in a 25% chance of a 50 basis point (0.50%) rate cut at the Fed’s July meeting. In Fed Chair Jerome Powell’s July 10 Congressional testimony, a congressperson asked what economic factors would justify a 50 basis point rate cut. Powell effectively dodged the question, saying that policymakers look at a broad range of data when making rate decisions. Still, the idea of a steep rate reduction has gone mainstream. Continue reading
Let’s get one thing straight: Market pullbacks, corrections, and bear markets happen.
Last year was a perfect example of this: The S&P 500 Index endured five separate 5% pullbacks throughout the year, and a nearly 20% bear market correction from the September peak until December 24. (We consider a pullback 5% off the recent highs, a correction 10% off the recent highs, and a bear market is 20% off the recent highs.)
Global indexes pause ahead of a busy week. U.S. stocks and global indexes are down modestly this morning as markets await a busy week of Federal Reserve (Fed) speakers. Fed Chair Jerome Powell will give his semi-annual testimony before House and Senate committees tomorrow and Thursday, respectively. Continue reading