Friends
The all-important personal consumption expenditures price index increased a seasonally adjusted 0.1% for the month and 2.6% year-over-year as expected. Consumer spending was slightly weaker than expected, and if Nike’s earnings after the close are any indication, the consumer appears to be lightening up on spending. Stocks did little on this news for most of the trading session, but we saw a little selling near the close as buyers appeared to have left the building early.
For the day, the Dow Jones Industrial Average was down 45 points to close at 39,118. The S&P 500 was down 22 points to finish the day at 5,460. The Nasdaq Composite Index was down 126 points to close at 17,732. Gold was down $1 to trade at $2,336, while oil was down $.29 to trade at $81.45 per barrel, WTI.
It was a good first half of the year for stocks. Our message to you from the beginning of the year has been that conditions are good for stocks, but valuations in the leaders (or generals as I refer to them) were stretched. As we look into the second half of the year, conditions are still pretty good for stocks (earnings have been better than expected for instance), but it would be nice to see some rotation to just about anything other than the 7 stocks that have accounted for most of the return of the S&P 500. As I mentioned yesterday, 5% to 10% pullbacks within a calendar year are normal and we haven’t seen anything like that so far this year. So, we would not be surprised to see more volatility in the second half of the year. Still, as we close the quarter, the bulls still hold the high ground.
As for last night’s debate, I don’t believe I need to comment.
Have a great weekend everyone.
