John Hancock: Weekly Market Recap Week Ended June 21st

Return to record territory 

U.S. stock indexes climbed more than 2%, with the S&P 500 eclipsing a record high that it had set in late April and the Dow just shy of its historic peak. The latest weekly results extended the market’s strong run in June, which has seen stocks post a V-shaped recovery in the wake of May’s steep decline.

Soft indicators

A monthly gauge of U.S. business growth dropped more than expected as activity in both the manufacturing and services sectors softened. IHS Markit’s U.S. manufacturing purchasing managers’ index fell to the lowest reading since September 2009, while its services index dropped to the lowest since March 2016.

Fed outlook

The U.S. Federal Reserve Board kept interest rates unchanged, but comments from Fed Chairman Jerome Powell lifted market expectations that a potential rate cut could come as soon as July 31, when the Fed concludes its next policy meeting. Powell said, “The case for somewhat more accommodative policy has strengthened.”

Yield drop-off 

Expectations for slower global growth and more accommodative monetary policies briefly sent the yield of the 10-year U.S. Treasury bond below 2% on Thursday, the lowest since late 2016. The story was similar for government debt in Europe, with yields in Germany and France approaching all-time lows, reflecting a rise in bond prices.