Stocks traded very narrowly as markets searched for direction during the first half of June. The peak-to-trough range for the NASDAQ Composite Index (NASDAQ) barely topped 4%, while the Dow Jones Industrial Average (Dow) and Standard and Poor’s 500 (S&P 500) traded in a range of less than 1½%.
As of June 15th, cumulative returns for the month were mostly positive. The NASDAQ posted a gain of 324 points (2.36%) and the S&P 500 gained 42 points (1.01%), while the Dow lost 230 points (0.67%). The S&P 500 posted several new all-time highs last week and the NASDAQ hit its first record close since late April.
News on the jobs front remains mostly positive as new unemployment claims continue to drop. Many businesses are struggling to find employees, however, and job postings remain in the millions.
Inflation continues to be a primary concern of the markets. In fact, consumer prices rose by 5% in May alone, posting the steepest increase since 2008. However, keep in mind that this statistic is a year-over-year calculation – and our economy was fully engulfed in a global pandemic in May of 2020. We believe that pent-up demand coupled with a shortage of many goods and materials are fueling current inflation. As more and more businesses and factories reopen, we expect a curb to the current spike in inflation rates.
The Federal Reserve will conclude its regularly scheduled meeting this week. It is widely expected that they will address the topic of inflation and the markets will be watching for any indication of a change in direction from their current strategy. As always, we will keep you apprised of the situation.