Market Perspective for July 1, 2019

Equities opened strong following the G20 summit this past weekend. President Trump and President Xi agreed to resume talks and delayed implementation of further tariffs. The S&P 500 Index gained 0.67 percent and the technology-heavy Nasdaq rallied 1.06 percent.

SPDR Technology (XLK) advanced 1.59 percent. SPDR Financials (XLF) increased 1.20 percent, aided by rising interest rates.

The June manufacturing PMI increased from May according to Markit’s survey, while the ISM survey showed a small decline. Both numbers are above 50, the level that indicates expansion. The Eurozone PMI fell to 47.6 with the German economy at 45. China’s PMI slipped to 49.4. Service PMIs due later this week are expected to be far stronger.

Motor vehicle sales are projected to have hit an annualized pace of 17 million in June, down from May but still near multi-year highs.

Friday brings the next employment report. Economists forecast 170,000 new jobs, a 3.6 percent unemployment rate and 0.3 percent wage growth.

The 10-year Treasury yield climbed to 2.03 percent. iShares 20+ Year Treasury Bond (TLT) fell 0.21 percent. High-yield, corporate and floating-rate funds closed higher thanks to falling credit risk.

Emerging markets rallied on hopes for rekindled global trade. iShares MSCI Emerging Markets (EEM) advanced 1.25 percent, while iShares MSCI EAFE (EFA) gained 0.50 percent.

The U.S. Dollar Index rallied 0.70 percent. Gold slumped $25 an ounce to $1383 on dollar strength and rising optimism.

There are no major earnings reports scheduled this week.

The stock market will close at 1 P.M. on Wednesday and stay closed on Thursday for Independence Day.

 

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