Hello all - we hope your June was a nice one. Hard to believe the year is halfway over.
It was another nice month for stocks, too. Aside from a short focus on fighting in the Middle East, it was a fairly uneventful month for the markets. The Dow saw a gain of 4.3%, the S&P 500 rose 5.1%, and the Nasdaq, which has a higher concentration of tech stocks, added a solid 6.1%.
The second quarter has come to an end, too. The S&P had its best quarter since 2023 and the Nasdaq had its best quarter since 2020.
It was another nice month for stocks, too. Aside from a short focus on fighting in the Middle East, it was a fairly uneventful month for the markets. The Dow saw a gain of 4.3%, the S&P 500 rose 5.1%, and the Nasdaq, which has a higher concentration of tech stocks, added a solid 6.1%.
The second quarter has come to an end, too. The S&P had its best quarter since 2023 and the Nasdaq had its best quarter since 2020.
Here’s a look at how the markets moved this month:
Here’s a look at how the various sectors performed:
Volatility continues to cool.
Bonds also continue to cool, signaling fears fading from investors.
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TARIFFS
The tariffs were a non-issue for the markets for most of the month.
However, late in the month, you started to hear more investors concerned about the July 9th trade deadline that is quickly approaching. No one wants to see another market drop like we saw in the first round of tariff talks.
The fears were put to rest when the Trump administration deemphasized the July 9th deadline. The markets rose as a result.
Then – the very next day – the Trump administration renewed tariff worries as they called off all tariff talks with Canada. While it eventually worked out in our favor, the trade uncertainty is not gone and we may see more volatility as a result.
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FED
The Fed held another policy meeting this month where they held rates steady yet again.
The lack of a cut drew the ire of the Trump administration who are anxious for lower borrowing rates. In fact, nearly all other major central banks around the globe are lowering rates.
The chart below shows the number of rate cuts by other central banks on any given month, while we do not cut.
The chart below shows the number of rate cuts by other central banks on any given month, while we do not cut.
Here’s another way to look at the other central banks cutting their rates:
We’ve used the picture below a lot recently as a reminder. The Fed likes to tout its independence, but they are all highly political, far-left leaning academics.
Remember, former Fed chief Janet Yellen became the Biden Treasury Secretary. Former Fed Vice-chair Lael Brainard became Biden’s head of the National Economic Council. We think politics alone will be the reason preventing them from agreeing with anything in this administration.
Remember, former Fed chief Janet Yellen became the Biden Treasury Secretary. Former Fed Vice-chair Lael Brainard became Biden’s head of the National Economic Council. We think politics alone will be the reason preventing them from agreeing with anything in this administration.
Looking ahead, investors are still expecting rate cuts this year, with the market pricing in more than two cuts between now and the end of the year. Many investors see a cut as soon as July. We don’t think the odds of a cut are very good right now and the market may be disappointed and fall as a result.
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INFLATION
Inflation is no longer trending lower, but has yet to really turn higher.
When we look at inflation on a month-to-month basis, prices rose slightly.
When excluding energy and food from the calculation (which economists call the “core” measurement), inflation rose slightly again, too.
Inflation at the business level had seen a couple months lower, but took a slight turn higher last month. This inflation level tends to lead the CPI, so it may signal more inflation coming in the CPI reports.
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OTHER ECONOMIC DATA
Other economic data released this month was mixed, though mostly lower.
The manufacturing part of our economy saw another decline, while the service sector turned lower and is now slightly contracting.
Retail sales moved lower:
Durable goods (these are items with a longer life, like a phone or refrigerator) also saw a solid gain. However, excluding the transportation sector which had several large purchases, the increase was only 0.5%.
Consumer confidence took a turn slightly lower.
Meanwhile, small business owners were slightly more optimistic.
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Where does the market go from here?
We are on the expensive side in the short term and would be cautious putting new money in here. However, the market remains driven by comments from Washington, so it’s hard to make any firm predictions.
This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.
