Market Beat: Quarter No. 2, in review
TRUCKEE, Calif. andamp;#8212; June is normally one of the worst months of the year for the stock market behind only September which is typically the worst. This year was different though andamp;#8212; the second quarter was weak but we finished with an unusually strong June.The Dow posted its best returns for June since 1997, the Sandamp;P since 1999 and the NASDAQ since the year 2000. The Dow finished the month up 3.93 percent, the Sandamp;P was up 3.96 percent and the NASDAQ was up 3.81 percent. For the quarter, the Dow was down -2.51 percent, the Sandamp;P was down -3.29 percent and the NASDAQ was down -5.06 percent. Year to date the numbers arenandamp;#8217;t too bad as the Dow is up 5.42 percent, the Sandamp;P is up 8.31 percent and the NASDAQ is up 12.66 percent.The best performing sectors for the month were energy, telecom services and health care. The best performing sectors for the second quarter were telecom services, utilities and consumer staples. Year to date, the best performing sectors have been telecom services, information technology and financials.June finished the month on such a strong note because eurozone leaders made a surprise announcement on Friday, June 29, of a plan to shore up the euro. They agreed to let their rescue fund give aid directly to troubled banks and to assist with sovereign bonds issued by struggling states. They also plan to create a single banking supervisor for eurozone banks. The news set off a very strong market rally that saw the Dow close up 277 points for the day. You can be sure that the eurozone problems are not solved permanently by this announcement, but it is a step forward and should soothe the markets for awhile.Going forward investors should be focused on corporate earnings and the usual slew of economic data. What is interesting and kind of a conundrum for market participants is that we are in the situation where poor economic numbers could be good for the market. Even though that seems to be contradictory, if the economic data is soft, that increases the odds of another round of stimulus from the Federal Reserve.If the fed authorizes another round of quantitative easing, that money typically flows into the market as institutional investors get cash for their bond holdings and need a place to invest it. The second quarter earnings releases will start with Alcoa on July 9 and should provide some direction for the market in the near term.Kenneth Roberts is a Truckee based Registered Investment Advisor. Information on his money management service can be found at http://www.fusiontargetretirement.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.
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