The Major Markets
The Major Markets ended the first full week of June mixed with most of the domestic and developed international markets closing lower. However, not all was bad as Emerging markets managed to add another weekly gain of about a percentage point return.
Day by Day
After ending the prior holiday shortened trading week completely flat on the S&P 500, Monday opening higher, seeing only temporary weakness mid-day shortly after comments from Janet Yellen seemed to indicate to many market participants that a rate hike this month was unlikely.
Tuesday saw the market reach a new high on the year mid-day as investors bought stocks, bonds, gold, and oil in the lowest volume day of the year. Gains on the day faded as the S&P 500 closed only .13% higher by the close.
Wednesday’s session experienced a fair amount of volatility early in the session. News from around the world began to shape the remainder of the week as The World Bank lowered its global growth forecast for the year from 2.9% to 2.4% due to the collapse in oil income for developing countries. By the end of the session, the market managed to close 1/3 percent higher on the session.
Thursday’s session saw the first signs of real weakness last week as copper prices fell sharply for the second time this week. One of the few economic reports last week was the weekly New jobless claims which came in lower than expected, helping to improve overall sentiment. By the end of the day, the S&P 500 managed to trim the early morning losses down to only -.17%.
However, it was Friday’s session that drastically changed the view on the week. The S&P 500 opened right at the prior week’s close as is spent most of the day in territory that kept it negative for the week. The German 10-year bund yield reached a record low of 0.01% Friday before closing at 0.02% on the week. This caused many to wonder if the bund was to be the next bond to trade with a negative yield. The Final close of 2096.07 put the S&P 500 down -0.15% on the week.
The S&P 500 continued to show its difficulty in trading above t he 2100 level as it shaved off 3.06 points on the week. The first time that the S&P 500 traded at or above the 2096 level was back on 2/13/2015, some 69 weeks ago. Since that date, the S&P 500 managed to gain an additional 1.61% before it gave it back along with an additional 12.78% to bring us back to Friday’s close and a -0.04% loss from point to point. Investors have struggled to find an area of the equity market with real gains over this time period as the market has felt like it has been locked in a sideways range, with some sizeable drops in the meantime.
The NASDAQ has a similar story as it closed with a 0.01% gain over that same time period. Mid-Caps haven’t faired much better as the S&P Mid Cap 400 is down -0.25%. One ray of sunshine in the domestic market is in the Small Caps as the S&P 600 managed to create a whopping 1.01% return over this time period despite dropping 16.61% at its worst.
The story only gets worse when looking overseas. The MSCI world index, a global index representing large and mid-cap markets, has fallen just shy of 5%. While Emerging Markets have had a few positive weekly returns in a row recently, this benchmark is far from breakeven with a loss of -16.50% which had been down over -30% at its worst.
The story in Europe isn’t much better as the MSCI Europe index is now down -13.53% since 2/13/2015, all while the S&P 500 has struggled to remain unchanged.
Markets in Waiting
The S&P 500 as well as other global markets appear stuck as decisions loom in the next couple weeks for the Federal Funds Rate domestically, and the Brexit vote in the UK.
The vote date is fast approaching for the UK as British voters must decide if they will remain part of the 28 countries that make up the European Union.
Recent polling has been mixed as some pollsters have consistently showed a leaning to stay while others have shown a desire to leave.
The ORB/Guardian Poll made headlines this week when they showed a sudden spike in favor of Brexit over Bremain.
With only a handful of days left, it is clear that Britain’s EU future still hangs in the balance.