Investment Commentary –June 27th, 2017

Market Indices as of Market Close June 27th, 2017

Dow 21,310 (7.83% YTD)
S&P 2,419 (8.06% YTD)
NASDAQ 6,146 (14.18% YTD)
Gold $1,247 (7.54%)
OIL $43.72 (-23.16%)
US 10Y Treasury 2.209 (-23.66%)
Barclay Bond Aggregate (2.95% YTD)

Wall St. falters as Senate delays health vote

The tech-heavy Nasdaq led a broad Wall Street decline on Tuesday with stocks falling more sharply after a healthcare bill was delayed in the U.S. Senate, raising fresh questions about President Trump’s domestic agenda.

The benchmark S&P 500 posted its biggest one-day drop in about six weeks and closed at its lowest point since May 31.

Major indexes extended losses after U.S. Senate Republican leader Mitch McConnell decided to put off a planned vote on a bill to dismantle the Affordable Care Act until after the Senate’s July 4 recess.

The healthcare legislation, which has encountered resistance from several Republicans, is the first plank of Trump’s domestic policy agenda, with investors eager for him to move onto his other plans including tax cuts, infrastructure spending and deregulation.

Promises for such domestic polices helped fuel a 13.1-percent rise for the benchmark S&P 500 since Trump’s Nov. 8 election.


It Was another Rough Day for Tech Stocks

Volatility erupted again in the biggest U.S. technology stocks, sending companies from Nvidia Corp. to Tesla Inc. and Netflix Inc. reeling in bursts of volume that mirrored the rout of two weeks ago.

The Nasdaq 100 Index dropped 1.8 percent, closing at its lowest point of the session, and has fallen 2.3 percent in the last two days for the biggest decline since June 9 and 12. A key technical level, the gauge’s 50-day moving average, was breached at the close for the first time in seven months.

The decline came amid a setback for President Donald Trump’s healthcare agenda, a multibillion-dollar fine for Google and cautious comments about asset valuations by Federal Reserve Chair Janet Yellen.

Around the Web:

Bearish oil
After climbing above $55 in February, crude oil prices fell to around $43 a barrel on Wednesday and stayed there the rest of the week. That decline of greater than 20% means that oil is in a bear market for the sixth time in the past four years.

China’s rise
After debating for more than three years, index provider MSCI on Tuesday announced that it will slowly begin to include China’s domestic stock shares in its global indexes. The move will raise China’s profile in world markets and in the portfolios of U.S. investors with international holdings.

Buybacks slow
Major U.S. companies spent about 18% less on stock repurchases in the first quarter than they did in the same period a year ago, according to S&P Dow Jones Indices. One reason for the decline: Stock prices have risen sharply from a year ago, making it more expensive for companies to buy back shares.

On Tap for the rest of the week:
Wednesday: Pending home sales, National Association of Realtors
Thursday: First-quarter GDP, third estimate, U.S. Bureau of Economic Analysis

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

The IWW Created
On this day in 1905, the Industrial Workers of the World (IWW) was created Chicago. This labor union included such names as Eugene Debs and William D. Haywood. The goal of the union was to bring together all the workers of the world and, once strong enough, to bring down the capitalist system in one fell strike. It never became as large as its leaders had hoped, and despite a few victories it became the target of government officials, business leaders, and the more conservative labor unions.

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.