Market Commentary, 07/02/18
The US stock markets closed broadly lower again last week, with the Dow and S&P falling more than 1% and the Nasdaq closing down more than 2%. While the declines were moderate, there was a touch of turbulence with the Dow posting two triple digit declines: falling 328 points on Monday and 165 on Wednesday. Subsequently it rose Thursday and Friday as the financial sector lead the market.
Friday marked the mid-year point, with the Dow down nearly 2%, the S&P up nearly 2%, and the Nasdaq with a gain of nearly 9% year-to-date. Nasdaq owes much of this year’s performance and recent record highs to its heavier weighting in technology stock. Tech and consumer discretionary are the only two sectors in the S&P that have posted double-digit total returns in 2018.
We mentioned last week that the trade tensions are taking a toll on the worldwide markets. In fact, China’s Shanghai Composite has fallen more than 20% from the 2018 high, with 10% of that decline coming in the second quarter. The significance to the US market is that our potential Chinese tariffs are disrupting their markets more than vice versa. This could result in China “blinking first” in the current tariff standoff. (Source: MarketWatch)
The Consumer Price Index (CPI), the most widely watched and used measure of inflation, has risen 2.8% over the 12 months ending May 2018. This marks the highest inflation rate since February 2012. The Fed allowing interest rates to increase in conjunction with an increase in gas prices have spurred this rise, but it’s not enough to be problematic. (Source: Bureau of Labor Statistics)
Jeremiah Patterson, CFP®
Copelin Financial Advisors
514 Brooks Street
Sugar Land, TX 77478
Phone: 281 240-2902
Fax: 281 240-2856
Securities offered through ProEquities, Inc., a Registered Broker-Dealer and Member FINRA & SIPC Advisory Services offered through Harvest Investment Services, LLC., a Registered Investment Advisor Copelin Financial Advisors, Inc and Harvest Investment Services, LLC are independent of ProEquities, Inc.