John Hancock: Weekly Market Recap Week Ended June 7th
Fuel from the Fed
Stock indexes surged more than 2% on Tuesday after U.S. Federal Reserve Chairman Jerome Powell said the Fed is closely watching the negative impact that trade wars could have on the economy. He said the Fed “will act as appropriate to sustain the expansion”—a comment that was seen as increasing the potential that an interest-rate cut could come later this year.
Stock indexes soared to weekly gains of more than 4% as the market recovered most—but not all—of the ground lost in May’s sell-off. For the Dow, the positive result snapped a string of six consecutive weekly declines; the S&P 500 had declined four straight weeks.
Modest inflation and a slowdown in job growth fueled another bond price rally, sending yields lower and extending an inversion of the yield curve. The yield of the 10-year U.S. Treasury bond slipped below 2.10%—a big drop from three months ago, when the yield was around 2.70%.
The World Bank trimmed its global economic growth forecast for 2019 to 2.6%, down from a 2.9% projection it had made in January. The bank said that global trade and investment flows between countries have fallen faster than expected so far this year.