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  • Writer's pictureKevin Hurley

Marketbites: Market Rally Takes a Breather


Portfolio Manager Commentary:

Stocks fell Tuesday, the first trading day of the shortened week, after a recent rally drove the market to levels not seen in more than a year. Energy was the biggest laggard in the S&P 500, with the sector falling more than 2%. Meanwhile, Intel, Nike, and Boeing dragged on the Dow, each down by more than 3%. In contrast, homebuilders outperformed following a stronger-than-expected housing report. PulteGroup, D.R. Horton, and Lennar were each higher by more than 1%. Elsewhere, Nvidia also bucked the trend, up more than 2% while the major indexes sagged. Investors were seemingly receptive toward the central bank’s decision to skip a June rate hike last week. Federal Reserve Chairman Jerome Powell told a press conference on Wednesday that the central bank has yet to make a decision on policy ahead of the July meeting. However, policymakers are forecasting two more quarter-point rate increases later this year. The decision to skip a hike in June broke the Fed’s streak of ten consecutive interest rate increases.

Traders digested May U.S. housing starts data that topped estimates. There were 1.63 million starts last month, higher than the 1.39 million housing starts expected by economists polled by Dow Jones.

Chart of the Day:

The world’s central banks underestimated inflation last year. To counteract this mistake, central bankers across the world are sharply lifting inflation forecasts, penciling in further interest-rate increases and warning investors that interest rates will stay high for some time. Some have set aside plans to keep interest rates on hold. About a year into their campaign against high inflation, policy makers are some way from being able to declare victory. In the U.S. and Europe, underlying inflation is still around 5% or higher even as last year’s heady increases in energy and food prices fade from view.

Source: WSJ

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