June 30th, 2019 Market Recap
Financial Markets – A Recap Of The First half 2019
The S&P 500 index produced a return of 17.35% in the first half of 2019, its best first half since 1997. June also marks the 121st month of the current economic expansion making this the longest economic expansion in U.S. History. However, increasing concerns about slowing global economic growth (including the U.S.) and increased risks due to trade tariffs resulted in deteriorating macro-economic conditions in the first half of 2019. As a result, the U.S. Federal Reserve signaled it is open to cutting interest rates to stimulate growth and sustain the current economic expansion. In short, 2019 has been a very good year but some signs point to a possible slowing of growth. We continue to maintain our long-standing view that timing the market is extremely difficult and that remaining fully invested in a diversified portfolio is the best course of action. The past 3 quarters have been prime examples: The S&P 500 declined 13.52% in the 4th quarter of 2018 and then rallied 17.35% in the 1st half of 2019.
U.S. Federal Reserve
- At its June meeting, the U.S. Federal Reserve Chairman, Jerome Powell, announced that the committee would keep the U.S. federal funds rate target range steady at 2.25-2.50%. However, the Federal Reserve provided a strong indication that it is open to cutting interest rates in order to sustain the current economic expansion.
- A significant number of the committee members now favor an interest rate cut of 50bps before year end. Seven members now see 50bps of rate cuts in 2019, one sees a 25bps rate cut, and eight members see interest rates on hold. That's a significant shift from the March FOMC meeting where eleven members saw rates on hold this year.
Posted on Tue, July 2, 2019
by Kimberly Victoria