The S&P 500 set a new all-time high on Thursday, surpassing a previous record from April.
That milestone was part of what’s been the strongest start to June since 1955, according to figures compiled by LPL Financial. This followed action by Federal Reserve policymakers who signaled they could cut interest rates. Traders want lower rates because they’re worried the economy is slowing, and lower interest rates can help stimulate growth because money becomes cheaper for individuals and businesses to borrow.
This week, professional investors are also hoping for more signs of progress on trade, and assurances that higher tariffs and the stock market’s recent choppiness haven’t affected the confidence among U.S. consumers. Here’s what they’ll be watching.
What’s happening: President Donald Trump said he will meet with Chinese President Xi Jinping at the G20 summit that begins Friday.
Why it matters: The ongoing trade spats between the U.S. and China, including retaliatory tariffs both countries have imposed on imported goods, have rattled investors in recent months. Wall Street wants resolution in the form of a trade deal. While that may not come this week, these talks could spur negotiations that eventually lead to one.
What it means for you: If there’s no deal, U.S. companies say the current tariffs will force them to raise prices—meaning that by Christmastime, you may have to pay more money for goods like cellphones, computers, toys, and electronics. There could also be more bumpiness in the market related to the progress of these talks, which affects your portfolio in the short term.
What's happening: Traders await two surveys this week that track confidence among U.S. consumers: One from The Conference Board is scheduled for Tuesday, and one from the University of Michigan comes out on Friday. Economists currently project that sentiment weakened slightly in June, and traders will care if it turns out these readings show a big slump, because that means consumers might spend less in the second half of this year.
Economists generally expect that several housing-related reports this week will show a moderate gain in home sales during May, though. If they do, that could make professional investors less anxious, since people don’t usually buy homes unless they’re feeling good about their financial situation.
Why it matters: If Americans are feeling less confident, that's a big deal because they'll buy less when they're nervous—and consumer spending accounts for more than two-thirds of U.S. gross domestic product.
Traders piece together economic reports to get a sense of the pace of growth ahead—whether it will stay mostly the same, accelerate, or slow down (which is the concern right now). If Americans aren’t feeling good, that suggests slowing. The most recent employment report, which showed that job growth lagged in May, feeds into that narrative.
Altogether, these data points help traders draw conclusions about the economy and suggest whether U.S. businesses will do better or worse—and if their stock prices should be higher or lower.
What it means for you: How your neighbors feel matters to the overall economy—and to you. If people don’t feel confident, they’ll spend less money on things like homes or cars, which in turn affects lots of things, including whether employers add jobs or start shedding them.
After an especially bumpy May in the stock market, last week’s new high came as welcome news. But that roller coaster serves as a reminder that ups and downs for the market are both normal. Don’t overreact to the news, and stay the course with your investment strategy.
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