Investment Commentary –June 20th, 2017

Market Indices as of Market Close June 20th, 2017
Dow 21,467 (8.63% YTD)
S&P 2,437 (8.85% YTD)
NASDAQ 6,188 (14.95% YTD)
Gold $1,244 (7.25%)
OIL $43.34 (-23.64%)
US 10Y Treasury 2.154 (-29.14%)
Barclay Bond Aggregate (2.58% YTD)

Wall St. falls on oil tumble, consumer sector and Fed worries
U.S. stocks closed lower on Tuesday as a sharp drop in oil prices hurt energy stocks and retail stocks were pulled down by concerns about’s (AMZN.O) plan to boost its apparel business, while investors also worried about future Federal Reserve rate hikes.

Healthcare .SPXHC was the brightest spot in stocks with a 0.3 percent rise while the consumer discretionary .SPLRCD index showed a 1.25 percent drop in line with the energy index .SPNY decline.

Oil prices fell about 2 percent after news of increases in supply by several key producers, a trend that has undermined attempts by OPEC and other producers to support the market through reduced output.

“People really thought $45 to $55 was kind of the range of oil, but it is getting weaker and weaker and U.S. producers are getting more and more efficient,” said Ken Polcari, Director of the NYSE floor division at O’Neil Securities in New York.

The market deepened its losses heading into the close after comments by Dallas Federal Reserve President Robert Kaplan appeared to add to investor unease about the Fed’s projected pace of monetary policy tightening.

Around the Web:

Oil drops
Crude oil prices fell for the fourth week in a row as efforts by leading oil-producing nations to curb production failed to offset growing oil supplies. New data on the U.S. oil inventory sent oil prices below $45 a barrel, the lowest level in eight months.

Going international
U.S. investors have recently put far more money into international stock funds than funds investing in domestic equities. Net investments in international funds totaled nearly $104 billion over the past 12 months, versus $62 billion for U.S. equity funds, according to Strategic Insight. The trend continued in May, when withdrawals from U.S. funds exceeded new money coming in by $5 billion.

Diminished yields
Wednesday’s weak inflation reading helped spark a price rally in the U.S. bond market, sending yields lower. The yield of the 10-year U.S. Treasury bond closed at 2.15% on Wednesday, the lowest in eight months. Yields fall as bond prices rise.

Rate trajectory
As expected, the U.S. Federal Reserve lifted the federal funds rate by another quarter of a percentage point, the third such increase since December 2016. Eight years into an economic expansion, the rate is now set at a range of 1.00% to 1.25%.

On Tap for the rest of the week:
Thursday: The Conference Board Leading Economic Index for the U.S.
Friday: New home sales, U.S. Census Bureau

This past week’s leaders were Healthcare and Utilities. Basic Materials were among the Laggards.

Economic Strangle Hold Causes War Of 1812
On this day in 1812, President James Madison, tired of the toll British ships were inflicting on the United States’ merchant vessels, urged congress to declare war on Great Britain. Madison had tried embargos and non-intercourse acts before to try and rebuff the British but all had failed, causing him to urge a declaration of war.

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 investments.