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Captial Markets Recap for June!

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SUMMARY

  • U.S. equities rallied in June. The third estimate showed first quarter real gross domestic product increased at an annual rate of 3.1%, up from the 2.2% increase in the fourth quarter 2018. The unemployment rate held steady at 3.6%, with 75,000 jobs added in May. U.S. manufacturing PMI showed a negligible improvement in June as inflationary pressures stayed muted and new orders increased. Though still at elevated heights, consumer confidence declined to levels last seen in September 2017 due in part to the escalation in trade and tariff tensions.
  • International equities and emerging market equities posted positive returns in June, even as market data suggests a slowdown. U.K. manufacturing PMI hit a 76-month low in June, falling for the third consecutive month. A decrease in new orders and production along with the uncertainty in Brexit caused business confidence to fall in the U.K., although many companies maintain a positive outlook for the future. Eurozone operating conditions for consumer goods companies showed improvements not seen since January. Ongoing trade pressures and an uncertain political environment led to weakening orders. In China, trade tensions caused a decline in total sales, export orders, and production. A fall in new work sent production into contraction.
  • Fixed income investment returns were positive in June. The Federal Open Market Committee (FOMC) chose to hold their target rate steady during their June meeting, though FOMC members expect rates to be lower by the end of 2020. The futures market has already priced in multiple rate cuts in 2019. The yield on the 10-year U.S. Treasury note fell to 2.0% and remains below the three-month Treasury bill (2.12%), which often occurs ahead of recessions.

U.S. EQUITIES

  • Broad U.S. stocks were positive (up 7.0%) for the month and on 1-year basis (up 9.0%).
  • Size – Small-cap (up 7.1%) slightly outpaced large-cap (up 7.0) mid-cap (up 6.9%) equities in June, but large-cap stocks led on a 1-year basis over small-cap stocks (10.0% vs. -3.3%).
  • Style – Value stocks (up 7.1%) outgained growth stocks (up 6.9%) in the month, but growth stocks continue to outperform on a 1-year basis (10.6% versus 7.3%, respectively).

LOOKING AHEAD

  • A globally diversified portfolio can help smooth out swings in the market during times of increasing volatility. Remaining invested through the uneasiness of these short-term market movements is important to achieve long-term investment goals.
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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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.