This is going to be a big week for the stock market, with all eyes on Japan and the G20 summit, where President Trump and President Xi will have a face to face meeting with a goal of restarting trade negotiations. The good news is there had been enormous progress and even a 150-page, seven-chapter agreement that should be the basis of the resurrected talks.
Meanwhile, the June market rally continues to be one for the record book. All sectors save Energy are higher in the past 30-days. Rotation into sectors like Health Care and Materials are offsetting the weakness in Communication Services, which continues to grapple with lawmakers circling.
S&P 500 Index | +3.01% | |
Communication Services (XLC) | +1.40% | |
Consumer Discretionary (XLY) | +3.13% | |
Consumer Staples (XLP) | +2.14% | |
Energy (XLE) | -1.49% | |
Financials (XLF) | +0.11% | |
Health Care (XLV) | +5.04% | |
Industrials (XLI) | +2.08% | |
Materials (XLB) | +5.43% | |
Real Estate (XLRE) | +3.91% | |
Technology (XLK) | +4.44% | |
Utilities (XLU) | +3.43% |
It’s still about the Fed
Last week, the market took its cue from the Federal Reserve, which continues to evolve in its policy approach. I’m thrilled this Fed learned from its disastrous by-the-book actions last year that mitigated fiscal growth efforts and the best year of corporate profits ever. Others continue to report the Fed is contemplating rate cuts, which means the monetary policy-setting body sees economic peril.
I continue to read that the Powell Fed is now committed to not sparking economic peril.
It took a good night’s sleep, and some pondering, but the market erupted higher after the Federal Open Market Committee (FOMC) announcement and the Powell press conference. The action in the market also underscores that whether its trade wars or a potential Middle East conflict, nothing matters more than smart actions and communications from the Federal Reserve.