The U.S. markets were up in June with small stocks, as measured by the Russell 2000, up 3.46%. The S&P 500 rose 0.62%.
Year-to-date the equity market is continuing the trend of the previous few years of low volatility and positive returns. We have now experienced 16 consecutive months without a normal market correction, which is highly unusual.
International markets lagged the U.S. markets reversing the recent trend, with the MSCI EAFE down 0.18%. Emerging markets were up 1.01%, continuing their strong performance.
With an improving global growth backdrop, international earnings should continue to improve which should support rising equity values.
We recently increased our international equity exposure based on improving growth prospects and attractive valuations. Foreign equity returns have begun to decouple from the U.S. markets, providing portfolios added diversification.
Emerging market equities have climbed this year, largely driven by an increase in earnings. Valuations have also picked up, although they still do not look especially high.
Oil prices declined in June, driving down energy prices and inflation. A continued decline in oil prices could put pressure on the equity markets.
Following its meeting in June, the Federal Open Market Committee raised the target range for the federal funds rate by 25 basis points to 1.00%-1.25%. This is the second rate increase of the three that we expect this year.
- This information has been compiled using data and other statements of fact derived from sources which we believe to be accurate and reliable. However, such data and other statements of fact have not been verified by us, and we do not make any representations as to their accuracy or completeness. Any opinion expressed herein reflects our judgment at this date and is subject to change.