Weekly Market Roundup
Large cap and small cap growth led the market last week. The Nasdaq gained +2.44% and the Russell 2000 added +1.24%, with the Russell closing the week at an all-time high. The S&P 500 finished up +0.96% while the Dow slipped slightly at -0.61%, reflecting the week's preference for growth-oriented positioning. International equities also had a strong week, with the MSCI ACWI Ex-USA gaining +2.10%.
The week's defining event was Wednesday's FOMC decision. The Fed held rates steady, but the meeting repriced market expectations toward more hikes by year-end. Despite that shift, yields on the long end of the curve fell, as the bond market is signaling that it sees inflation decelerating, even as the Fed maintains a cautious posture. Crude oil has collapsed from its spring highs, reinforcing the disinflation picture that has been building in recent weeks.
The VIX closed at 16.91, remaining well within the lower-volatility range. The week also marked the June quarterly options expiration, one of the largest on record, which added some technical turbulence mid-week but cleared without disruption.
Thursday is the week's most important day. First-quarter GDP, the PCE price index, personal spending, and initial jobless claims all report on the same morning, giving us a comprehensive look at growth, inflation, and the consumer in a single session. PCE is the Federal Reserve's preferred inflation gauge because it captures a broader basket of goods and services than CPI, and it adjusts for changes in how consumers actually spend over time. With the bond market already pricing in a peak in inflation, Thursday's reading will either confirm or challenge that view. ADP employment and S&P Global PMI on Tuesday will offer an early labor and activity pulse. The Fed's annual bank stress test results are due Wednesday, and the University of Michigan consumer survey closes the week Friday.
The Russell 2000 closing at an all-time high is a meaningful development. When small caps lead, it typically reflects confidence in the domestic economy, and that kind of breadth is a positive signal for the health of the rally. Technology names continued to run, with high-beta momentum names in particular showing strength. With inflation continuing to soften and the crude oil pullback reinforcing that read, the macro backdrop remains constructive. We stay focused on the data, particularly Thursday's PCE, as the next important confirmation of where the inflation cycle stands. We remain constructively bullish heading into the back half of June, but are mindful of potential earnings headwinds as we move into July.
If you have any questions about the above, please reach out to us to set up a one-to-one meeting so we can review your situation.
Sincerely,
President
SBC Investment Management
P: (602) 641-5996 · M: (319) 520-2033 · E: bandrus@sbcinvestmentmanagement.com
Investment Analyst, Junior Portfolio Manager
SBC Investment Management
P: (435) 775-2950 · M: (435) 590-8317 · E: jrehkop@sbcinvestmentmanagement.com