Best First Half Since 1998

July 1, 2021

Monthly Market Recap – June

June is traditionally a very average month for the market, with a typical gain of .8% and a positive close 60% of the time. At the end of May, the S&P 500 had risen for 3 consecutive months and was 12% higher for the year. Keep in mind, the average annual return for the S&P 500 over the past 100 years has been 10%. It is not unusual for the market to “correct” 5% to 10% as a simple part of the ebb and flow, and we wondered if we might not see that in June. During the month, we continued to see increasing vaccination rates and a subsequent decline in new cases to the lowest level since shortly after the pandemic began. States and cities lifted pandemic restrictions, and there was a real feeling that we might be getting to the end of this tunnel. By the end of the month, the S&P 500 had moved higher for a 4th consecutive month, hitting numerous new all-time highs on its way to a 2.2% gain for the month and is now up 14.4% for the year. It was the best first half performance for the S&P 500 since 1998.

The month began with a nice rally following the Memorial Day weekend after a report that new cases of the virus had reached a post-pandemic low. The holiday-shortened week was relatively quiet and ended with a report that 559,000 jobs were reclaimed in May. At the end of the week, the S&P 500 was .6% higher. The second week of June saw a continuation of the good earnings reports and strong economic numbers we had been seeing for the last month. The government was able to confiscate some of the ransom that had been taken from Colonial Pipeline, and that news sent cryptocurrencies lower. We learned that the Consumer Price Index in May jumped by a year-over-year record of 5%, but the week ended with a 1% rally for the S&P 500.

The third week was the worst of the month, with the 30 stock Dow moving lower every single day. The Federal Reserve reported inflation was running hotter than they had expected and, while they still think it is transitory, it may require rates to rise sooner than expected. We learned first-time claims for jobless benefits were unexpectedly higher last week, and concerns about rising interest rates sent the S&P 500 down more than 1% on Friday and down 1.9% for the week. It was the worst week this year for the Dow Industrial average. We expected some follow-through selling as we began the last full week of the month, but a rally at the open on the first day of the week had legs and sent the S&P 500 more than 1% higher. The Biden administration reported an infrastructure deal was getting close, and the S&P 500 ended the best week of the month, gaining 2.7%. The week before a 3-day weekend tends to have low volatility and an upward bias, and that is how we ended the month.

July is historically the best month of the year for the stock market. The average return of 1.6% is double the monthly average and 25% higher than any other month. The market continues to be encouraged by the declining pandemic and the historic amounts of money being pumped into the economy by the government, but the rally stalled in late June over concern about the Delta variant slowing the reopen. We continue to remind investors that stocks are, by every historic measure, overvalued. That does not necessarily mean stocks are due for a drop, but either stock prices need to move lower, or earnings need to continue moving strongly higher. In this environment, a large and/or prolonged market decline does not seem likely, but a 5% to 10% pullback can come at any time. We do have some cash on the sidelines and will continue to be buyers given an opportunity in some of the reopen trades.

If you know someone who would be interested in learning more about Greenberg Financial Group, or who is retired or thinking about retiring, or would simply like us to review their current portfolio, please contact us at 520-544-4909, or visit our NEW website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show, which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790. You can also listen to us on iHeartRadio, follow us on Twitter @gbergfinancial, or on Facebook under Greenberg Financial Group.