Markets lost some momentum on slow trading and ended the week mixed. Despite the sluggish behavior, equities are up strongly for the quarter and the S&P 500 is poised for its longest rally since 1998.1 The record is based on the S&P being up 6 quarters in a row. While the S&P lost 0.10% and the Dow fell 0.56%, the Nasdaq managed a gain of 0.68%.2
Economy & Geopolitical Considerations
Economic data was largely unsurprising last week. A dismal first quarter GDP update didn’t faze investors who regarded it as old news. While Q1 GDP growth fell to -2.9%, investors blamed the contraction on the unusually cold weather and cuts to healthcare spending.3 On the other hand, lukewarm consumer spending in May caused economists to trim economic growth expectations for the second quarter. Despite the poor showing, analysts admitted that challenges in calculating healthcare spending might have artificially lowered spending numbers.4
On the geopolitical front, the Ukrainian government in Kiev signed historic free trade agreements with the EU, Georgia, and Moldova, integrating the economies of the three former Soviet-Bloc countries more closely with Europe, and potentially paving the way for future entry into the EU. The move immediately drew threats from Russian leaders, who are worried about losing control over their neighbors.5 Although the situation is far from resolved, we can hope that the threat of further economic sanctions will cause Russia to back down.
As the clock ticks down on the second quarter, investors are looking ahead for economic data to support hopes that economic activity picked up in the last three months. The short trading week is packed with economic releases, including the June Employment Situation report and a speech by Fed chair Janet Yellen.
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