The stock market is trading higher this morning after a cease-fire in the trade war between the U.S. and China. President Trump and Chinese President Xi agreed over the weekend not to impose any additional tariffs. Investors are feeling relieved with the fact the trade war is not escalating and with the cooperative tone. The positive opening this morning follows some strong performance.
The Dow Jones Industrial Average gained over 7% last month, for its best June since 1938, according to Dow Jones Market Data. The gains came as the Federal Reserve signaled an easier monetary policy, saying it would “act as appropriate” to maintain the current economic expansion. So, the market is expecting interest rate cuts as early as this month. Also supporting the market of late has been hopes trade tensions with China would ease.
Generally, the market action during the first half of the year, which saw the Standard & Poor’s 500 Index rise 17% (for its best first half in over 20 years), has been dominated by two big picture items – the Federal Reserve shifting to an accommodative stance, and the ups and downs of the trade war. Market moves have often tracked headlines and developments related to these issues, as we are seeing again this morning with the tariff news. The stock market rebound since the Fed shifted from hawkish to dovish reinforces the wisdom of the old market adage don’t fight the fed!
The week ahead is holiday-shortened, with U.S. stock markets closing early (at 1:00 pm) on Wednesday and closed on Thursday in observance of Independence Day. When the markets reopen on Friday, we’ll get the June Jobs Report, where market expectations are for the economy to add about 165,000 jobs and for the unemployment rate to hold steady at 3.6%.
Enjoy the holiday – Southport Station Financial Management, LLC