It was a wild ride last week, but markets remained with little change through it all. Will that wild ride continue?
Monday
S&P 500 0.94% | NASDAQ 1.52%
Markets bounced to open the week. It may seem surprising given rising geo-political risks out of the middle east. However, calmer heads seemed to be prevailing early as negotiations were agreed upon to bring a quick end to fighting. Markets met this news with an upbeat response. This move brought the S&P 500 within 2% of its all-time high.
Tuesday
S&P 500 0.84% | NASDAQ 0.91%
Retail sales fell more than expected in May, coming in at a 0.9%. The elevated pace of buying by the consumer is showing signs of slowing. The Federal Reserve Bank (FRB) projection for Q2 growth has been revised down to 3.4%, still a strong reading. An additional cause for risk-off sentiment was increased hostilities in the middle east. Rising tensions increase the risk of oil supplies being disrupted at some point in the future. Oil markets were up on the day, which could be inflationary in the short term.
Wednesday
S&P 500 0.03% | NASDAQ 0.13%
Housing starts for May fell 9.8%. Also, building permits are expected to come down by 29K in May, from April. The big news on the day, however, was the FRB meeting. The FRB did not change rates, and their overall tone was taken as dovish. Market expectations for future rate cuts increased for the remainder of the year after the meeting.
Thursday
S&P 500 0.00% | NASDAQ 0.00%
Happy Juneteenth!
Friday
S&P 500 0.22% | NASDAQ 0.51%
Economic data was light, however geo-political risks were elevated on Friday, from comments on Thursday afternoon (after the market close). Market movement was attributable to the risk-off sentiment created from those risks. Oil was up marginally on the day as risks of a supply shock were becoming more prevalent.
Conclusion
S&P 500 0.15% | NASDAQ 0.21%
This week had much to do with the rise of a conflict in the middle east. The economic data, however, should not be overlooked for how weak it was. As always, one month does not make a trend, however it does warrant caution and a watchful eye. The majority of the volatility felt this week should not spill over into the next. In geo-political conflicts each week can be wildly different.
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