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Market Insights - June 2018

Market Insights - June 2018

Key Takeaways 

  • June equity returns have been robust as investors remained positive and tax cuts trickled down to consumer spending. 
  • Surprisingly strong employment and GDP numbers outweighed trade concerns. 
  • The Fed, as expected, raised rates a quarter point at its June 13th meeting. 
  • Technology continues to dominate the market. 

June, so far, has been very generous to equity markets; returns on the Dow and S&P 500 for the first ten trading days exceeded the total return of the previous 5 months! Global stock markets have also improved slightly, although developed markets are flat for the year, and emerging markets are still lower by about 2%. 

Technology has once again been the standout among market sectors, driven by stocks such as Netflix (up 11.7% so far in June). The tech heavy NASDAQ Composite is ahead 13% year to date, and reached an all-time high on June 14th. Along with technology, consumer discretionary companies (+13.5%) had been one of the strongest sectors, while telecommunication services (-12.4%) and consumer staples (-10.9%) have been the laggards.   

While we remain positive for large cap US equity returns in 2018, we have higher expectations for medium and smaller companies, which have underperformed their large-cap brethren in three of the last four years, and are less subject to the impacts of trade and tariff issues. We believe both emerging and developed markets have compelling valuations and yields as compared to the S&P 500. 

Year-to-date: 

  • The Dow Jones Industrial Average up 2.9%. 
  • The S&P 500 up 5.0% 
  • The NASDAQ Composite up 13.0% 
  • The MSCI EAFE Index (foreign stocks) is flat  
  • The MSCI Emerging Markets Index is down 2.0% 

Gene Balerna, CIMA® Director, Investment Research
Steven Weber, Registered Investment Advisor
The Bedminster Group 

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