June 30 marked the final trading session not only of the month, but also the first half of 2017. It’s a period marked by strong stock market returns and exceptionally low volatility, although volatility returned the last week of June. Markets alternated between gains and losses, with stocks plunging June 27 and June 29, but surging on June 28.,
Despite ongoing conflicts in Washington, Wall Street is still in rally mode. The S&P 500 had its best start since 2013, and Nasdaq marked the strongest first half of the year since 2009. Stocks have been lifted by the sense that other global economies, particularly in Europe, are starting to stabilize.
Not all stocks have risen, though. The S&P 500 telecommunications sector, which includes phone and Internet providers, as well as the energy sector, including oil and gas companies, are both down.
Our economy slowed less in the first quarter than initially anticipated because of unexpectedly higher consumer spending and a bigger jump in exports. The U.S. gross domestic product—which is the total value of goods produced and services provided in a country during one year—increased at a 1.4% annual rate. It is still the slowest growth rate since the second quarter of 2016.
Job growth has been steady and consumers are feeling better about their ability to pay their bills, take trips, and cover other expenses. Consumer confidence rose in June from May, and experts say conditions are good for economic growth to continue.
Americans’ personal income soared in June, but that extra cash didn’t seem to prompt consumers into spending. Personal consumption expenditures—or PCEs—only gained .1% for June, the worst showing since February. Spending rebounded in March and April after starting the year on a soft note, but the latest reports suggest consumers are being frugal once again despite pay increases.
What can we expect from the market over the next six months?
Looking into the second half of 2017, analysts believe it is unlikely that low volatility will persist indefinitely. Investors may need to brace for more big swings—up and down—in the coming months. Wall Street will be focused on whether corporate earnings can continue rising at a healthy pace despite what is going on in Washington and around the globe.
Wall Street professionals say the best days for the stock market this year may have already occurred. What might stall future gains is a market that has become too expensive, political gridlock, a slow-growing economy, and worries about top-performing tech stocks cooling off. There’s also a feeling that the market’s fast start has stolen from gains that might have come later this year.
Interestingly, consumer attitudes hit its lowest level since November 2016. Economists expect the measure of consumer attitudes to fall even more in the coming months. Consumer attitudes soured in June as U.S. consumer sentiment slid to a seven-month low, though still rising slightly above economists’ expectations, and still holding historical highs in the first half of 2017.
That’s it for the July educational economic update. As always, if you have any questions or concerns about what we’ve discussed, please give our office a call
Disclosure: While we believe the information in this report is reliable, we cannot guarantee its accuracy. Opinions expressed are subject to change without notice and are not intended as investment advice or a solicitation for the purchase or sale of any security. Please consult your financial professional before making any investment decision. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining markets. The indices mentioned are unmanaged and cannot be invested into directly. Past performance does not guarantee future results.