Stock gains continued in April, with the economy growing faster than expected at an annual growth rate of 3.2% for the first quarter. However, markets stumbled in May triggered again by U.S. and China trade issues, as the U.S. increased tariffs on nearly half of Chinese imports from 10% to 25%, after which China retaliated by increasing tariffs on $60 billion worth of American goods. After the Dow fell for six weeks in a row and the S&P 500 fell for four weeks, stocks rallied back in June. Concerns about slowing global economies led to global central banks signaling interest rate cuts, which help move stock markets forward.
Overall for the quarter, large U.S. stocks (up 4.3%) outperformed smaller U.S. stocks (up 2.1%). The strongest sectors were financials and materials, while energy was the only sector that was negative for the quarter. International stocks posted gains of 3.97%, while emerging market stocks were relatively flat.
It is now anticipated that the Federal Reserve will decrease interest rates at least one time before the end of the year. The yield on the 10-year Treasury fell significantly from 2.41% to 1.99% by quarter-end. The yield curve remains inverted (short-term bond yields are higher than longer-term bond yields) which often precedes a recession.
Our investment team remains vigilant in closely monitoring the current macroeconomic climate and your investment portfolio. We’ve begun to reposition our clients’ portfolios to become marginally more defensive. If you have any questions, please do not hesitate to reach out to your financial advisor.
|Index||2nd Quarter 2019||Year-to-date|
|Dow Jones 30||3.21%||15.40%|
|Bloomberg Barclays U.S. Agg Bond||3.08%||6.11%|
|MSCI EAFE Index||3.97%||14.49%|
|MSCI EM Index||0.74%||10.76%|
Sources: Y Charts and J.P. Morgan Asset Management
Figures as of June 30, 2019. Past performance cannot guarantee future results.
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Tags: Market Recap