After the worst fourth quarter since the Financial Crisis and worst December since the Great Depression, stocks have come roaring back. In fact, the S&P 500 Index gained 17.4% the first half of the year for its best start to a year since 1997 and eighth-best start since 1950.
Stocks in a Holding Pattern Ahead of G-20
US: S&P 500 Index -0.3%, Dow -0.7%, Nasdaq -0.3%
Europe: STOXX Europe 600 +0.03%, German DAX +0.5% France CAC 40 +0.2%, U.K. FTSE 100 +0.1%
Asia: Japan Nikkei +0.1%, China Shanghai Composite -0.8%, Korea KOSPI +0.2%
Rates/Commodities: 10-Year Treasury yield -6 basis points to 2.00%, WTI crude oil +3.6%, COMEX gold: +0.1%
Markets were modestly lower this week, but U.S. equities have consolidated just below all-time highs as market participants paused in anticipation of the G20 Summit in Osaka, Japan, this weekend.
We continue to believe in our year-end fair value estimate for the S&P 500 Index in the range of 3,000, as we discussed in our just-released Midyear Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets, and we would view any decline beyond 10% as excessive, given current fundamentals on economic growth, corporate profits, inflation, and interest rates.
U.S. equities consolidate just below all-time highs. Major U.S. indexes are modestly lower over the past week, with the S&P 500 Index down 0.97% since June 20’s record closing high. However, under the surface we are seeing the type of action necessary for another leg higher. Continue reading
We believe fundamentals are supportive of moderate gross domestic product (GDP) growth this year, as we discussed in our just-released Midyear Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets. Progress on trade is central to our growth projections, so we slightly reduced our U.S. GDP growth forecast to 2.25–2.5% for 2019.
Stocks opened higher ahead of G20. All eyes are focused on Osaka, Japan, as President Trump prepares to meet with President Xi to work toward a U.S.-China trade agreement. Earlier gains were pared after reports that the list of China’s demands will include a lift of the ban of technology product sales to Huawei. Continue reading
Policy gets a lot of real estate in our just-released Midyear Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets. It’s no coincidence that policy is chapter one because it’s such a big part of the economic and market outlook for the second half of the year.
Trade hopes lifting stocks. Stocks opened higher this morning after U.S. Treasury Secretary Steven Mnuchin characterized the U.S.-China deal as having been 90% completed. Continue reading
The Federal Reserve (Fed) will likely cut rates at its next meeting in late July. This begs the question: Will the Fed really cut rates with stocks up so much year to date and near all-time highs? “It might sound strange for the Fed to cut rates with stocks up a lot for the year,” explained LPL Senior Market Strategist Ryan Detrick. “But since 1975, the Fed has cut rates 26 times with the S&P 500 Index up at least 15% for the year, most recently in 1995 and 1998.”