Investment Commentary –June 13th, 2017
Market Indices as of Market Close June 13th, 2017
Dow 21,328 (6.95% YTD)
S&P 2,440 (8.51% YTD)
NASDAQ 6,220 (16.57% YTD)
Gold $1,269 (9.13%)
OIL $46.50 (-14.85%)
US 10Y Treasury 2.208 (-23.51%)
Barclay Bond Aggregate (2.35% YTD)
Wall St. bounces back with tech, eyes on Fed meeting
Wall Street gained on Tuesday, with the S&P 500, Dow industrials and Russell 2000 setting record closing highs, as technology stocks bounced back and investors positioned ahead of an expected Federal Reserve interest rate hike.
The Dow Jones Industrial Average .DJI rose 92.8 points, or 0.44 percent, to 21,328.47, the S&P 500 .SPX gained 10.96 points, or 0.45 percent, to 2,440.35 and the Nasdaq Composite .IXIC added 44.90 points, or 0.73 percent, to 6,220.37.
Fed set to raise interest rates, give more detail on balance sheet wind-down
The U.S. Federal Reserve is widely expected to raise its benchmark interest rate this week due to a tightening labor market and may also provide more detail on its plans to shrink the mammoth bond portfolio it amassed to nurse the economic recovery.
The central bank is scheduled to release its decision at 2 p.m EDT (1800 GMT) on Wednesday at the conclusion of its two-day policy meeting. Fed Chair Janet Yellen is due to hold a press conference at 2:30 pm EDT (1830 GMT).
“The expectation of a rate hike…is widely held, and has been reinforced by the most recent round of Fed communications,” said Michael Feroli, an economist with J.P. Morgan.
Economists polled by Reuters overwhelmingly see the Fed raising its benchmark rate to a target range of 1.00 to 1.25 percent this week.
On Tap for the rest of the week:
U.S. Federal Reserve Board concludes two-day meeting, Chair Janet Yellen holds press conference
Industrial production and capacity utilization, U.S. Federal Reserve
Headlines around the markets:
In a week filled with political intrigue in Washington and London, the S&P 500 and the Dow were little changed. The NASDAQ Composite fell 1.6%, owing entirely to a steep decline on Friday afternoon after analysts questioned whether recent technology stock gains are sustainable.
Oil drops further
Crude oil prices fell for the second week in a row, dropping to below $46 a barrel as oversupply issues continued to weigh on the market. Prices have declined 11% over the past two weeks.
The U.S. Federal Reserve Board is widely expected to lift short-term interest rates on Wednesday. Analysts will be watching for indications about the pace of additional rate hikes and the possibility that the Fed will soon begin unwinding the $4.4 trillion worth of assets on its balance sheet.
U.K. vote shocker
Prime Minister Theresa May’s hopes of strengthening her Conservative Party’s ruling status backfired, as the party lost seats in a snap U.K. election and surrendered its parliamentary majority. The outcome is expected to weaken Ms. May’s negotiating position in Brexit talks.
LEADERS & LAGGARDS:
This past week’s leaders were Financials and Industrial Goods, laggards were Technology and Consumer Goods.
THIS DAY IN FINANCIAL HISTORY: Home Owners Refinancing Act Passed
The Home Owners Refinancing Act passed through Congress on this day in 1933. The act created the Home Owners Loan Corporation (HOLC), which gave federal funds to citizens for mortgages and even repairs to their homes.
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.
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