The US capital markets had a good week, with the Nasdaq and S&P500 up +2.4% and +1.5%, respectively. The Dow Jones Industrial Average lagged a bit, posting a +0.8% weekly gain, and closing at 24,456.
The health care sector performed well, posting a weekly gain of +3.1%, while IT and utilities were not far behind, with weekly gains of +2.3% and +2.4%, respectively. Stocks with perceived higher risks performed better, with small cap, growth stocks posting weekly gain of +3.5%, while large cap, value stocks posted a weekly gain of +1.1%.
The US capital markets this year have seen increased volatility, with large daily and intra-day swings. The fundamentals on the underlying companies remain strong, and earnings are expected to expand further with corporate tax cuts taking effect. The primary driver of volatility this week, as has been the case for the last couple of months, continues to be trade war fears with China as well as many US allies. Despite the volatility, the markets continue to push higher overall, with the Russell 2000 index up over +10% for the year. The US has a significant trade deficit overall, but with trade talk constantly in the news, the US has seen a narrowing of the trade deficit, as the numbers coming for May showed a rise of +1.9% in exports against a rise of +0.4% in imports.
Commodities struggled overall, with the exception of precious metals, as gold was up 0.2% for the week, closing at $1,255 an ounce, and silver was flat for the week, closing at $16.04 an ounce.
Cryptocurrencies had a decent week with Bitcoin up +3.0 and currently at $6,456. Steem spiked, but fell back for a breakeven week, closing at $1.51. EOS halted its recent slide, and was up +6.6% for the week, currently at $8.53.
Overall the US capital markets remain strong, but I expect volatility to continue as the second half the year has begun. I remain fully invested.
Take care,
Brian