Market Commentary: Second Quarter
Not only has it been hot outside with temperatures well in excess of 100 degrees Fahrenheit here in the Tri-Cities, but the global stock markets have been pretty hot as well. The major stock indexes have continued to show positive rates of return as the economy continues to open and businesses increase production to meet the demand of consumers. The S&P 500 Index gained 8.55% for the quarter increasing its YTD gain to 15.25% for the first half of the year. Small companies represented by the Russell 2000 increased 4.29% for the quarter, pushing its gain through June 30th to 17.54%. International stocks represented by the iShares MSCI EAFE Index gained 5.17% for the quarter, and 8.83% YTD. Bond prices have eased their anticipation of future increases in interest rates with a quarterly gain of 0.27% for the Barclays US Gov/Credit 1-5 Year Index but did not overcome first quarter losses to yield a YTD loss of 0.30%.
You may have noticed that almost everything that you would like to purchase has increased in price. There is also an issue of finding items that you might need – like a new car. Inventory is at a minimum across the nation. There is a lot of talk about these inflationary prices – if they are going to be a longer-term issue or if they will quickly come down as companies ramp up production to meet the pent-up consumer demand.
For instance, you might expect your air conditioner to stop working if the temperature is 115 degrees, and you might expect that a service repair person may not get to you right away because other people are experiencing the same air conditioning issue. You could also expect the temperatures to cool off from their record highs. The Federal Reserve is trying to figure out if this economy is in an unusual hot spell where they need to adjust interest rates to cool it down a little bit or if it will cool off on its own. There are several factors that will play into how the economy responds, which will be determined by time and viewed through the lens of the future.
As always, we appreciate the trust you place in Petersen Hastings to help you achieve your financial goals. Please reach out to your advisor regarding anything in your life that is changing, or any questions that you have. We also want to help your family and friends with their financial decisions, so if you know somebody that is nearing retirement or has financial questions, please contact us and we can arrange an introduction.