In this week’s recap: Wall Street maintains its risk-on mood, even as tensions grow between the U.S. and Iran, influenced by a White House tweet and a dovish signal from the Federal Reserve.
Weekly Economic Update
THE WEEK ON WALL STREET
The S&P 500 hit an all-time peak of 2,964.03, in intraday trading Friday, while improving 2.20% across five market days. The Dow Jones Industrial Average and Nasdaq Composite posted respective, 5-day advances of 2.41% and 3.01%. In addition, the MSCI EAFE benchmark of overseas stocks rose 2.58%.1-3
A White House tweet and the latest monetary policy outlook from the Federal Reserve sent the bulls running. These were the top two financial news items in an eventful week – a week in which the value of West Texas Intermediate crude rose 9.4%, the price of gold went above $1,400 for the first time in six years, and the 10-year Treasury yield fell below 2%. (Treasury yields fall when their prices rise, and vice versa.)1
The Fed’s June Policy Statement
The central bank stood pat on interest rates this month, but the expectations of some of its policymakers changed. About half the 17 Fed officials who have a say in monetary policy now project either one or two quarter-point rate cuts by the end of the year. As recently as March, no Fed official saw grounds for a 2019 cut.4
Markets interpreted this shift as a sign that the Fed might soon ease. While a rate cut is by no means a given, traders now believe that the Fed will make either a quarter-point or half-point cut at its July meeting.5
Last Tuesday’s Market-Moving Tweet
A day earlier, stocks rose after President Trump stated that he and Chinese President Xi Jinping “will be having an extended meeting” at this week’s G-20 summit in Japan.6
Investors were encouraged by this note, sensing a chance for progress in U.S.-China trade talks.
With tensions persisting between Iran and the U.S., investors are keeping a close eye on both commodity prices and stock indices. Economic or geopolitical developments could heavily influence the short-term movement of the markets.
THE WEEK AHEAD: KEY ECONOMIC DATA
- Tuesday: The Census Bureau’s snapshot of May new home buying and the Conference Board’s monthly consumer confidence index.
- Thursday: The federal government’s third (“final”) estimate of first-quarter gross domestic product.
- Friday: May consumer spending data from the Department of Commerce as well as the final June consumer sentiment index from the University of Michigan, another key gauge of consumer confidence.
Source: Econoday / MarketWatch Calendar, June 21, 2019
The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
- Monday: Carnival (CCL)
- Tuesday: FedEx (FDX), Micron Technology (MU)
- Wednesday: General Mills (GIS), Kraft Heinz (KHC), Paychex (PAYX)
- Thursday: Accenture (ACN), Nike (NKE), Walgreens Boots Alliance (WBA)
- Friday: Constellation Brands (STZ)
Source: Zacks.com, June 21, 2019
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
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1 – cnbc.com/2019/06/21/it-was-a-monumental-week-for-markets-with-major-milestones-in-stocks-bonds-gold-and-oil.html [6/21/19]
2 – wsj.com/market-data [6/21/19]
3 – quotes.wsj.com/index/XX/990300/historical-prices [6/21/19]
4 – latimes.com/politics/la-na-pol-trump-fed-interest-rate-policy-20190619-story.html [6/19/19]
5 – cmegroup.com/trading/interest-rates/countdown-to-fomc.html [6/21/19]
6 – cnbc.com/2019/06/18/trump-says-he-and-chinas-xi-spoke-will-have-extended-meeting-next-week-at-g-20.html [6/18/19]