Last week stocks showed mixed results as political headlines continued to dominate the news. The Dow lost 0.89%, and the S&P 500 was almost flat, with a 0.02% gain.[1] The NASDAQ, on the other hand, reached a record high on Thursday and ended the week up 1.32%.[2] Both the S&P 500 and NASDAQ experienced their fourth week of gains in a row.[3]International stocks in the MSCI EAFE lost ground, posting a 0.52% decline.[4] 

Two Key Perspectives From Last Week

1. Trade tension continued

Spats with U.S. allies, including Canada, and ongoing threats of a trade war with China captured investors' attention last week. On Friday, equities briefly stumbled when the U.S. pledged new tariffs on Chinese goods, and China responded by promising the same level of tariffs on the U.S.[5] A true trade war could slow global economic growth, but the current tariff tension may be little more than negotiation tactics.[6] 

2. Interest rates increased. 

On Wednesday, the Federal Reserve raised its benchmark interest rates for the second time this year. Fed Chairman Powell said, "...the economy is doing very well. Most people who want to find jobs are finding them and unemployment and inflation are low."[7] The Fed believes economic growth will continue at a faster rate than they last predicted. They also project that unemployment will fall to 3.6% by the end of 2018. The Fed may raise rates twice more this year.[8] 

The Takeaway

Getting caught up in the news cycles and international headlines is easy, but they often provide little perspective on what may actually lie ahead for investors. Instead of trying to predict market performance, we encourage you to focus on the data. 

This week, we'll gain new perspectives on the housing market, as well as employment. The insight will continue to help us build a picture of where the economy is today-and how to help our clients make the most of their opportunities. 

ECONOMIC CALENDAR

  • Monday: Housing Market Index
  • Tuesday: Housing Starts
  • Wednesday: Existing Home Sales
  • Thursday: Jobless Claims

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies. 

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

The Federal Reserve System (also known as the Federal Reserve and, informally, as the Fed) is the central banking system of the United States. The Federal Reserve System is composed of 12 regional Reserve banks which supervise state member banks. The Federal Reserve System controls the Federal Funds Rate (aka Fed Funds Rate), an important benchmark in financial markets used to influence the supply of money in the U.S. economy.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Strategies, LLC, and not necessarily those of the named Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

[1] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI®ion=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US
[2] www.cnbc.com/2018/06/15/us-stock-futures-dow-data-trade-and-politics-on-the-agenda.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
[3] www.marketwatch.com/story/dow-futures-tumble-140-points-as-trade-fight-ratchets-up-2018-06-15
[4] www.msci.com/end-of-day-data-search
[5] www.cnbc.com/2018/06/15/us-stock-futures-dow-data-trade-and-politics-on-the-agenda.html
[6] www.marketwatch.com/story/dow-futures-tumble-140-points-as-trade-fight-ratchets-up-2018-06-15
[7] www.nytimes.com/2018/06/13/business/economy/fed-jerome-powell.html
[8] www.nytimes.com/2018/06/13/us/politics/federal-reserve-raises-interest-rates.html