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Captial Markets Recap for July!

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SUMMARY

  • U.S. equities posted positive returns in July. An advanced estimate of real gross domestic product showed an increase of 2.1% in the second quarter, a slowdown from the 3.1% rate in the first quarter. The deceleration reflected a downturn in inventory, exports, and nonresidential fixed investment. In June, 224,000 jobs were added and the unemployment rate changed little at 3.7%. U.S. manufacturing PMI fell to the lowest level since September 2009. Softer client demand and a slower increase in production led to subdued optimism among manufacturers. Consumer confidence hit its highest level of the year as consumers became upbeat about business and labor market conditions.
  • International equities and emerging market equities returns were negative in July. U.K. manufacturing PMI fell as companies adjusted output in response to a strong decrease in new orders. Political uncertainty and a global economic slowdown contributed to the downturn in the manufacturing sector. Eurozone manufacturing contracted at an accelerated rate in July. Germany’s operating conditions fell at the sharpest rate in seven years and remains a weakness in the Eurozone. In China, inventories of inputs and goods declined but the manufacturing sector stabilized in the month. Business confidence in China picked up from June lows, though remains low due to trade disputes and softer economic conditions.
  • Fixed income investment returns were positive in June. For the first time since 2008, the Federal Open Market Committee (FOMC) cut the fed funds rate, reducing the short-term rate to between 2% – 2.25%. The Fed mentioned lower neutral interest rate assessments, global risk, and low inflation as key factors for cutting rates. The FOMC also agreed to end the $3.8 trillion balance-sheet runoff two months earlier than planned.

U.S. EQUITIES

  • Broad U.S. stocks were positive (up 1.5%) for the month and on 1-year basis (up 7.1%).
  • Size – Large-cap (up 1.6%) and mid-cap (up 1.4%) equities outpaced small-cap (up 0.6%) equities in July, and large-cap stocks meaningfully led on a 1-year basis over small-cap stocks (8.0% vs. -4.4%).
  • Style – Growth stocks (up 2.2%) outgained value stocks (up 0.8%) in the month, and growth stocks continue to outperform on a 1-year basis (9.9% versus 4.2%, respectively).

LOOKING AHEAD

  • Economic data has begun to show signs of a slowdown in the global economy as the current business cycle continues to grow long in the tooth. We encourage investors to revisit future cash needs and rebalance portfolios as needed.
  • It is virtually impossible to consistently time the market. Focusing on the benefits of diversification and the fundamentals of long-term investing are encouraged during times of volatile markets.
Sources: Morningstar, Inc., Barclays Capital, Russell and MSCI, U.S. Bureau of Labor Statistics, The Conference Board, IHS Markit, The Federal Reserve (central bank
of United States), The Bureau of Economic Analysis (U.S. Department of Commerce) & U.S. Department of Treasury

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This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.