Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 07/05/19. Rates and Economic Calendar Data from Bloomberg as of 07/05/19. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
Global equity markets finished higher during the holiday shortened week of trading. In the U.S., the S&P 500 Index, Dow Jones Industrial Average, and NASDAQ Composite gained 1.69%, 1.27%, and 1.96% respectively. Overseas, developed and emerging markets, as measured by the MSCI EAFE and MSCI Emerging Market Indexes, advanced 0.52% and 0.69% respectively. Over in fixed income, the 10 year U.S. Treasury yield fell as low as 1.94% before finishing the week 10 basis points higher at 2.04%.
Despite the short work week, there were some noteworthy political and economic updates. To kick off the week, stocks were lifted on optimistic trade and tariff news between the U.S. and China. The two countries agreed to hold off on additional tariffs and it was reported that the two sides were “back on track” with respect to trade talk negotiations. On Monday we also received some positive, although not necessarily strong, news coming out of manufacturing. June manufacturing PMI topped expectations and May’s PMI was revised higher than initially reported. On Wednesday, major averages in the U.S. continued their ascent, setting all-time highs for the third consecutive day. Stocks finally cooled off on Friday as data showed nonfarm payrolls increased by 224,000 jobs in June, more than expected and a rebound from the lackluster 72,000 jobs increase in May.
The reason for the lack of market support to such strong numbers is, of course, that the news dampened hopes for a July rate cut by the Federal Reserve (“Fed”). The probability of a July rate cut is still around 93% and overall, despite the market’s reaction, we’re pleased that the data provided validation that the economy is still growing, albeit at a slower pace, instead of having two consecutive months of disappointing data, perhaps suggesting that economic growth had run its course.
This week we have a few important updates relating to the Federal Reserve. On Wednesday, the Fed will be releasing its June meeting minutes while Chairman Jerome Powell is also set to testify before Congress for his semi-annual monetary policy report. In addition, investors will look to Thursday’s Consumer Price Index data to see if the trend of low inflation continues. One rate cut appears to be priced into the market so these events may help confirm or even shape investor’s expectations on future moves by the Federal Reserve amid conflicting data (e.g. strong job numbers yet a slowing economy) and determine if there’s a general belief that such moves will be supportive of additional stock market appreciation potential.
Asset allocation, diversification, and adherence to a longer term, customized financial plan will continue to be critical for investors. We encourage investors to stay disciplined and work with experienced financial professionals to help manage their portfolios through various market cycles within an appropriately diversified framework that is consistent with their objectives, time-frame and tolerance for risk.
Important Information and Disclaimers
Disclosures: Hennion & Walsh is the sponsor of SmartTrust® Unit Investment Trusts (UITs). For more information on SmartTrust® UITs, please visit www.smarttrustuit.com. The overview above is for informational purposes and is not an offer to sell or a solicitation of an offer to buy any SmartTrust® UITs. Investors should consider the Trust’s investment objective, risks, charges and expenses carefully before investing. The prospectus contains this and other information relevant to an investment in the Trust and investors should read the prospectus carefully before they invest.
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.
There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions. Distributions from REIT investments are taxed at the owner’s tax bracket.
The prices of small company and mid cap stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.
Investing in commodities is not suitable for all investors. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity.
Products that invest in commodities may employ more complex strategies which may expose investors to additional risks.
Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than original cost upon redemption or maturity. Bond Prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment.
MSCI- EAFE: The Morgan Stanley Capital International Europe, Australasia and Far East Index, a free float-adjusted market capitalization index that is designed to measure developed-market equity performance, excluding the United States and Canada.
MSCI-Emerging Markets: The Morgan Stanley Capital International Emerging Market Index, is a free float-adjusted market capitalization index that is designed to measure the performance of global emerging markets of about 25 emerging economies.
Russell 3000: The Russell 3000 measures the performance of the 3000 largest US companies based on total market capitalization and represents about 98% of the investible US Equity market.
ML BOFA US Corp Mstr [Merill Lynch US Corporate Master]: The Merrill Lynch Corporate Master Market Index is a statistical composite tracking the performance of the entire US corporate bond market over time.
ML Muni Master [Merill Lynch US Corporate Master]: The Merrill Lynch Municipal Bond Master Index is a broad measure of the municipal fixed income market.
Investors cannot directly purchase any index.
LIBOR, London Interbank Offered Rate, is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London.
The Dow Jones Industrial Average is an unweighted index of 30 “blue-chip” industrial U.S. stocks.
The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market, and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
DJ Equity REIT Index represents all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as Equity REITs according to the S&P Dow Jones Indices REIT Industry Classification Hierarchy. These companies are REITs that primarily own and operate income-producing real estate.