Market Perspective for June 8, 2018

The Dow Jones Industrial Average ended a bout of relative underperformance this week and led major indexes with a 2.77-percent climb. The S&P 500 and Russell 2000 both climbed more than 1 percent.

The Nasdaq slipped early Friday after reports claimed Apple (AAPL) reduced orders with iPhone suppliers, but the Nasdaq Composite still finished the week with a gain of 1.21 percent.

SPDR Technology (XLK) rallied 0.83 percent this week. SPDR Consumer Discretionary (XLY), Financials (XLF) and Healthcare (XLV) climbed 3.17, 2.18 and 2.02 percent, respectively. SPDR Consumer Staples (XLP) rallied 2.36 percent. SPDR Utilities (XLU) declined 3.03 percent.

The U.S. Dollar Index retreated from recent highs this week, but the domestic market outperformed foreign shares nonetheless. SPDR S&P 500 (SPY) gained 1.68 percent and iShares MSCI EAFE (EFA) 0.59 percent, while iShares MSCI Emerging Markets (EEM) returned 0.00 percent. Currency volatility weighed on emerging markets. Argentina received a $50 billion bailout from the IMF on Thursday, but the peso fell to a fresh 52-week low on Friday. Brazil’s real fell sharply through Thursday trading, then erased most of its losses on Friday.

The 10-year Treasury yield saw a small gain on the week but failed to breach the 3.0 percent level. It closed at 2.94 percent. Falling credit risk lifted high-yield credit. iShares iBoxx High Yield Corporate Bond (HYG) gained 0.55 percent. Rising Libor rates ahead of next week’s Federal Reserve meeting lifted floating-rate bonds.

Crude oil had a volatile week but finished close to where it started. Natural gas prices fell about 3 percent. Copper gained 6 percent. This week’s move erased all of the losses in 2018 and left copper on the cusp of a new 52-week high.

The Atlanta Federal Reserve adjusted its second-quarter GDP Now growth forecast to 4.6 percent on Friday.  The New York Fed and economist consensus both forecast growth of more than 3 percent.  Job opening for April hit a new all-time high of 6.7 million. The ISM and Markit services PMIs beat expectations, signaling a stronger expansion in the economy’s largest sector. Initial claims for unemployment fell to 222,000 in the first week of June.

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