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Market Highlights Q2 2019
All the stock indexes posted gains in Q2, adding to already strong returns for 2019. And yet, despite strong market gains, investors remain uneasy. Be- tween the threat of trade wars, actual trade wars, the sheer confusion around Brexit, and political conflict here at home, many investors opted out of stocks and moved into the safe- ty of long-term bonds. That new demand drove bond prices up and pushed the yield on the benchmark 10-year treasury down by 68 basis points to 2.00%. In the stock market, the S&P 500 gained 3.79%, followed closely by the tech stocks of the Nasdaq, the Dow, the Global Dow, and the small caps of the Russell 2000, which saw a quarterly gain of 1.74%.
Looking ahead, I expect to see much of the same tumult we saw in the first half of the year. Escalating tensions between the US and Iran, the weakening of the United Kingdom’s GDP, the ongoing tariff conflict with China, and the increasing focus on the next presidential election are sure to keep investors feeling off-kilter. The FOMC has indicated a decrease in the federal funds rate due to a lack of price inflation and slowing economic growth. Though employment is steady (the unemployment rate is holding firm at 3.6% and 5.9 million people are at work), according to the Conference Board Consumer Confidence IndexTM American consumer confidence has decreased. The housing market is erratic, at best. It’s an economic mash-up.
While it’s easy to assume that a strong first half will be followed by “mean-reversion” and a lower second half, that has not been the case historically. Historically, when the market was positive in the first half, it was positive in the second half 72% of the time. So I remain optimistic and confident—in the market and in your financial plan.
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