Market Perspective for June 7, 2019

Equities rebounded soundly this week. The Dow Jones Industrial Index gained 4.71 percent, the S&P 500 Index 4.41 percent, the Nasdaq 3.91 percent and the Russell 2000 Index 3.34 percent.

SPDR Materials (XLB) jumped 9.04 percent. SPDR Technology (XLK) rallied 5.98 percent, rebounding from recent weakness. SPDR Industrials (XLI) climbed 5.12 percent. SPDR Healthcare (XLV), Consumer Discretionary (XLY) and Financials (XLF) all gained more than 4 percent.

The Department of Justice and Federal Trade Commission launched investigations of Apple (AAPL), Facebook (FB), Alphabet (GOOGL) and Amazon (AMZN) on Monday. Weakness caused SPDR Communication Services (XLC) to return 0.98 percent for the week.

Manufacturing PMIs for May showed the economy is still in expansion. Service PMIs also showed expansion. The May employment report showed 75,000 new jobs, well below forecasts of 180,000. Still the unemployment rate held steady at 3.6 percent and wage growth was solid at 0.2 percent.

Federal Reserve Chairman Jerome Powell ignited this week’s rally after he said the Fed was ready to cut interest rates if necessary, saying “we will act as appropriate to sustain the expansion”. Speculators ran the odds of a July rate cut up to 88 percent by Friday, a reversal of a month ago. Sectors such as utilities and real estate jumped as traders also priced rate cuts into those sectors. The U.S. Dollar Index fell 1.1 percent.

The 10-year Treasury held steady on the week. iShares Barclays 20+ Year Treasury (TLT) fell 0.08 percent as the 30-year yield increased from Monday’s low.

Crude oil extended its losing streak but reached a short-term bottom at $52 per barrel. SPDR Energy (XLE) gained 4.25 percent for the week.

iShares MSCI EAFE (EFA) and iShares MSCI Emerging Markets (EEM) returned 3.41 percent and 1.15 percent, respectively.

Strong earnings from Beyond Meat (BYNC), Campbell’s Soup (CPB), Salesforce.com (CRM) and CIena (CIEN) boosted their shares this week.

 

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