June was a strong month and closed out a generally solid quarter, especially for U.S. stocks. The U.S. indices were up significantly for the month, and both the S&P 500 and the Nasdaq showed positive gains for the quarter, although the Dow lagged. International markets also did well in June but ended the quarter flat. Fixed income, on the other hand, was much weaker for both the month and quarter.

Financial markets were clearly in a risk-on mode, which benefited riskier investments like tech stocks at the expense of more boring ones.

U.S. stocks were up for June and the quarter while gains in international markets last month left them flat for the quarter. Fixed income didn’t fare as well. Market performance reflected positive economic news, with continued strong job creation, income and spending growth, and improving consumer confidence. But while inflation is down, it may not stay that way.

Unlike last week, when there really wasn’t much news, we did get quite a bit of data this week. And it was all positive. 

In truth, not much happened on the news front this week. The housing data did come in better than expected, which was good news and supports the idea that a recession is still some ways away. But, as we discussed last week, we kind of knew that already. Fed Chair Powell testified that the central bank is still determined to get inflation down to the 2 percent target and that it plans to keep rates high—and maybe raise them further. Again, we knew that because he has been saying it over and over for more than a year now. This week was more about olds than news. 

This was, somewhat surprisingly, a good week for economic news. Inflation continued to drop, especially for producers, and people continued to shop. There were two main questions out there. Will inflation keep getting better, and is a recession on its way? Now we have some answers. Yes, inflation is still getting better. No, a recession is still some ways away. It really was about as good as it gets on the news front. 

My colleague Sam Millette, director, fixed income on Commonwealth’s Investment Management and Research team, helped me put together this month’s Market Risk Update. Thanks for the assist, Sam! Let’s take a closer look.

My colleague Sam Millette, director, fixed income on Commonwealth’s Investment Management and Research team, helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam! Let’s take a closer look.

I thought there would be only one thing that mattered this week—the debt ceiling. And that does matter. But this morning, the jobs report came in much hotter than expected, and that matters, too. So, this will be a longer post than I originally expected. 

After a mixed April, markets pulled back in May. The exception was the Nasdaq, which was up by just under 6 percent. Other U.S. markets were flat or down, and international markets declined. The primary headwinds were the debt ceiling debate (which may soon be solved) and signs that inflation is picking up again. Still, job growth beat expectations, and consumer and business confidence ticked up.

After a continued rally in April, markets largely pulled back in May. Exceptions here were the Nasdaq, which rose, and the S&P 500, which was essentially flat. The Dow, international markets, and bond markets were down by low single digits. The primary drivers for the decline were concerns surrounding the economy, politics, and—above all—the debt ceiling.