Small-cap stocks are outperforming large-cap stocks by a significant margin. Small-cap companies do business mainly in the U.S. so their earnings have not been negatively affected by the rising U.S. dollar.
Despite a sell-off on the last day of the month, equities held enough of their gains to post positive month-over-month returns.
Technology stocks outperformed by a large margin, helping to boost an otherwise flat market. Tech shares are up 14% year to date.
Political affairs in Italy and Spain contributed to falling equity values in Europe. Government upheaval had an impact on short-term bonds in Italy. That sent prices tumbling and yields soaring.
Tumultuous foreign trade negotiations are contributing to market volatility and global growth concerns. We believe this creates headline risk, however, the true economic impact is yet to be determined.
Investor sentiment has been bolstered by the strong increase in new job creation. That helped drive the U.S. unemployment rate to an 18-year low of 3.8%.
Yields rose in early May, reaching an intra-month peak of 3.11%, the highest level since July 2011, before reversing course and closing the month lower than where they started.
The Federal Open Market Committee maintained the federal funds target rate range at 1.50%-1.75% in May. Most experts suggest a likely rate increase could occur following the committee's next meeting in June.
Global economic growth remains solid with profits continuing to rise. We believe that the positive global growth environment will support rising equity prices.
We favor international equities based on improved economic growth and attractive valuations relative to the U.S. markets.
- This information has been compiled using data and other statements of fact derived from sources which we believe to be accurate and reliable. However, such data and other statements of fact have not been verified by us, and we do not make any representations as to their accuracy or completeness. Any opinion expressed herein reflects our judgment at this date and is subject to change.