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June 17, 2019 - Stocks Take a Breather After Strong Start to June

| June 17, 2019

U.S. stocks stalled this week after posting their biggest weekly gain since November. The S&P 500 Index rose modestly in the week as investors struggled to find direction in trade headlines and conflicting economic reports. The  U.S. announced a trade deal with Mexico over the weekend, propelling the S&P 500 to its best gain of the week on Monday. Data showed business optimism climbed to a seven-month high in May, and retail sales increased for the third straight month. Still, Consumer Price Index and Producer Price Index reports indicated wholesale price and consumer inflation slowed, reflecting the U.S.-China trade dispute’s growing strain on demand.

Global stocks rose for a second straight week, encouraged by trade prospects after the United States rescinded tariff plans for Mexico. Chinese stocks posted their best week since April as investors cheered more stimulus, despite President Trump's threat to raise tariffs again if President Xi does not meet with him at the G-20 Summit later this month.

“Stocks have stabilized for now, but they aren’t in the clear yet,” said LPL Chief Investment Strategist John Lynch. The next two weeks could be pivotal for the global economy as the Federal Reserve (Fed) meets and the G-20 Summit takes place.”

In the upcoming week, investors will be watching the Fed as it concludes a two-day meeting with a policy decision on June 19. Policymakers are scheduled to provide updated rate and economic projections at the conclusion of the meeting. We’re not expecting the Fed to change its policy rate, but we do expect to get valuable commentary on the Fed’s thoughts about global uncertainty and the future of policy. The Bank of Japan will also meet next week, and Markit is scheduled to release preliminary manufacturing data for several global regions. Track these and other important events on our Weekly Global Economic & Policy Calendar.


Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

Investing in foreign and emerging markets securities involves special additional risks. These risk include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

FTSE 100 Index measures the 100 companies listed on the London Stock Exchange with the highest market capitalization.

The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100. Index trade volume on Q is scaled down by a factor of 1000.

The Hang Seng index is a market capitalization weighted index which tracks daily changes of the 48 largest companies in the Hong Kong stock market.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The small business optimism index is compiled from a survey that is conducted each month by the National  Federation of Independent Business (NFIB) of its members. The index is a composite of ten seasonally adjusted components based on questions on the following: plans to increase employment, plans to make capital outlays, plans to increase inventories, expect economy to improve, expect real sales higher, current inventory, current job openings, expected credit conditions, now a good time to expand, and earnings trend.

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