After six consecutive weekly declines, US Equity Markets rallied sharply last week, as investors increasingly believe the Fed will cut interest rates to mitigate slowing growth from recent trade tensions. In addition, positive progress was made between the US and Mexico, resulting in a deal over the weekend that will prevent new tariffs from going into effect. As a result, the equity markets posted their best week of the year. The S&P 500 rose 4.4% and is now up 14.6% for the year. The Nasdaq increased 3.9% for the week and is now up 16.7% for the year, while the Russell 2000 (small-cap stocks) was up 2.7% for the week to bring its gains for the year to 12.6%.
Global equity markets also benefited from strength in the US market, though the lack of meaningful progress in US-China trade talks hampered Asian markets. Developed Markets rose 3.2% for the week to bring gains for the year to 9.7%. Emerging Markets only increased 0.9% for the week, weighed down by negative returns in China. For the year, Emerging Markets have increased 4.3%.
Oil prices have fallen roughly 10% over the past month, as growing concerns about slowing global growth weigh on energy markets. OPEC has maintained its planned production cuts ahead of next month's OPEC meeting, while US rig counts actually slid to their lowest levels since February 2018, which could help stabilize prices. For the year, oil prices are up 16.5%.
Of Interest to Us
US interest rates hit fresh lows for the year last week, with the yield on the 10-Year Treasury closing at 2.09%. The market is currently placing an 86% likelihood that the Fed will lower interest rates by the end of July and 100% probability that the Fed cuts rates by the end of the year. In fact, the Street is pricing in a greater than 50% chance that the Fed cuts rates 3 times by year-end, up from a 1% chance less than one month ago. This comes following last week's announcement of Payroll data for May, which was well below expectations, while wage growth moderated to 3.1% from 3.2% in April.
for the week ending 6/7/2019
If you have questions about the markets or would like to talk about your investments, please contact me at firstname.lastname@example.org or via phone at 704.940.3544.
Investors Trust Company helps its clients make sound financial decisions by providing strategic advice and asset management services with a high level of personalized attention. If we may help you or your clients with their investment management needs, please contact one of our Relationship Team members at email@example.com.