2nd Quarter Market Commentary

July 25th, 2019 by Anchor Bay Capital's Investment Team

While the economy was generally positive in the second quarter, the markets were quite volatile with several ups and downs. The quarter began with U.S. stocks reaching new highs, until tariff concerns caused a significant short term correction. However, indications from the Federal Reserve that a rate cut may be in order sent the markets back into positive territory to end the quarter. Overall, the 2nd quarter was good from an economic standpoint, but topsy-turvy from a market perspective.

As stocks teeter-tottered between bullish and bearish, the bond market held fairly steady. Initially, long-term interest rates edged higher, but the mid-quarter stock correction, along with dovish comments from the Fed and lower global interest rates caused yield declines across all maturity lengths.
For the rest of the year, economists are predicting 3% GDP growth and recession still seems to be off into the future. Most consumer indicators like spending and retail sales continue to be positive. Plus, the employment picture remains bright with the strongest unemployment numbers in over 50 years.
The current U.S. economic expansion, which began 10 years ago and is already the longest in history, still has the potential to continue into the near future. While growth has been modest throughout this recovery, this extended period of stable economic growth with low inflation may continue for a little longer. Overall, the economy continues to look fairly strong with just some signs that the end of this historic expansion may come to a close next year.

Some of the items we will be monitoring closely for the 3rd quarter are geopolitical concerns, what the Fed does with interest rates, and the impact of the inverted yield curve (which is often an indicator of a slowing economy).

As always, we are dedicated to constantly monitoring the economy and the impact this may have on our client’s portfolios and financial plans. What’s in your best interest is our only interest and we take this motto very seriously.