New all-time high for the S&P 500. The S&P 500 Index made a new all-time closing high yesterday, finishing up 0.95% at 2954.18, the fifth new high so far this calendar year. More than 20% of the index traded to a new 52-week high, showing the sort of broad participation necessary for confirming new highs. Even though markets are modestly lower in early trading, the week is looking firmly positive for U.S. equities. After the worst May since 2010 for the S&P 500, June has come roaring back. In fact, Stocks are currently up 7.3% for the month, which would be the best month of June since 1955. The catch of course is there is still over a week left in June. To put this jump in perspective, after 14 trading days, this is the best start to any month since October 2011. Going forward, we are looking for participation from the industrials sector, as well as small cap stocks, with the Russell 2000 Index still needing to clear the 1600 resistance level.
Where are the bulls? The S&P 500 made new highs yesterday, yet there is a peculiar lack of bulls out there. For instance, the American Association of Individual Investors (AAII) Sentiment Poll showed bears greater than bulls for six consecutive weeks, the longest streak since November 2016. Also, we saw record outflows from equity Exchange Traded Products in May, along with fund managers historically underinvested in stocks relative to bonds. What does it all mean? We will take a closer look at this important question later today on the LPL Research blog.
Tensions with Iran escalate. A U.S. planned retaliatory strike against Iran’s shooting down an unmanned U.S. drone over international waters was called off but demonstrated possible action by the U.S. if Iran’s provocative behavior persists. At the core of this tension, biting U.S. economic sanctions on Iran, Iran’s attacks on foreign vessels (including oil tankers), involvement in Syria, and the country’s enrichment of uranium. WTI crude oil prices have gotten a lift from intensifying Middle East conflicts but remain range bound. Brent Crude is hovering around $65 a barrel after gaining a little over 1% yesterday.
LEI unchanged in May. Leading indicators are slowing but still signaling expansion. The Conference Board’s Leading Economic Index (LEI), which is one of our Five Forecasters, remained unchanged in May at 111.8, a 2.5% year-over-year increase, after rising 2.7% in April. We will continue to closely monitor the LEI as April and May are the slowest year-over-year growth readings since February 2017. However, the LEI squarely in positive territory with the majority of its components growing points to the durability of this expansion.
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- Markit US Manufacturing PMI (Preliminary, Jun)
- Markit US Services PMI (Preliminary, Jun)
- Existing Home Sales (MoM, May)
- Markit/BME Germany Manufactruring PMI (Preliminary, Jun)
- Markit Eurozone Manufacturing PMI (Preliminary, Jun)
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