Investment Commentary – June 10, 2015
Dow – 18,000.40 (6/10/15 close)
S&P 500 – 2,105.20 (6/10/15 close)
10-year Treasury – 2.48% (6/10/15)


  • The Dow Jones Industrial Average opened higher on Wednesday for the first time in five days and returned to positive territory for the year as a selloff in the equities market took a breather.
  • Analysts think inflation is starting to make waves again in fixed-income markets. But this time, the action started outside the United States. A report released by the German Federal Statistical Office on June 1 said that the country’s overall consumer price index is expected to rise to a year-over-year rate of 0.7% in May.
  • A slow upward trend in earnings (despite special factors depressing 4Q 2014 numbers), coupled with low interest rates, still make stocks look attractive in relative terms.
  • Analysts like cyclical and small cap stocks which are generally favored in a rising interest rate environment.
  • Headline consumer prices rose 0.1% between March and April (-0.2% y/y), while core CPI inflation firmed slightly to 1.8% y/y. High month-to-month increases in medical and education costs pushed overall costs up while evidence that the housing market is tightening can be seen in shelter costs rising at their fastest pace over the past four months since before the housing bubble popped.
  • Analysts believe that with large caps more exposed to international revenues, small- and mid-cap stocks may also provide investors more direct exposure to a strengthening U.S. economy.
  • S&P 500 operating earnings are estimated to be $25.80 for the first quarter of 2015, representing year-over year growth of -5.6%. Lower earnings were mainly due to low oil prices and the strong U.S. dollar. S&P 500 earnings excluding the energy sector grew at 8.5%.

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.