Market Insights

Stocks closed at new highs last week as the Federal Reserve offered hopes of a rate cut in July.

The S&P 500 rose 2.2 percent between Friday, June 14, and Friday, June 21. The index closed 5 points above its May closing record with more than three-quarters of member stocks advancing. Other key benchmarks like the Dow Jones Industrial Average and the Nasdaq-100 have yet to break out.

As expected, the Fed removed a promise to “be patient” about future rate increases. Policymakers instead fretted about “uncertainties” and pledged to “act as appropriate to sustain the expansion.” Translation? Expect a rate cut on July 31.

That drove money into “weak dollar” stocks like emerging markets and gold miners, which had lagged for most of the year. Biotechnology also rose from long-term lows after Pfizer (PFE) gobbled up oncology stock Array Biopharma (ARRY) for a 62 percent premium.

Software companies continued to melt higher led by Microsoft (MSFT), Oracle (ORCL) and Adobe Systems (ADBE). Energy, the worst major sector so far in 2019, was the best performer last week as tensions with Iran squeezed oil prices higher.

G20 vs Economic Data

Most economic news was relatively unimportant aside from the Fed. Volatile manufacturing reports covering New York and Philadelphia misses estimates, but initial jobless claims fell more than expected. Housing data was mixed.

That shouldn’t be a surprise because the big stories now are geopolitical as President Trump attempts to remake decades of trade policies. Polls generally show the public and business leaders fearing his actions will hurt confidence, but that hasn’t clearly hit the numbers yet. If anything, it’s potentially helped the economy by keeping a lid on interest rates.

It also raises the stakes for next week’s G-20 meeting. Will Trump and Chinese President Xi reach a deal? No one knows the answer. But either way, Chinese stocks, semiconductors and Apple (AAPL) will likely be active. Agricultural commodities like soybeans (@S), Deere (DE), Caterpillar (CAT) and Boeing (BA) could also move depending on the outcome.

Bitcoin and Bullion

Another interesting story has been simultaneous breakouts in gold (@GC) and Bitcoin (@XBT), which both closed at their highest levels in over a year. @GC benefited from the dovish Fed and weak dollar. @XBT benefited from changes at exchange Binance and Facebook’s (FB) new crypto initiative, Project Libra.

News Corp. (NWSA) had the biggest gain in the S&P 500 last week, rallying 14 percent after announcing it may sell its coupon business. NWSA, recently separated from Twenty-First Century Fox (FOXA), owns publishing businesses like Dow Jones and HarperCollinsPublishers.

Incyte (INCY) and Baker Hughes (BHGE) vied for second place. INCY rose amid the biotech rally and on positive drug-trial data. BHGE bounced from long-term lows along with other energy stocks.

Carnival (CCL), on the other hand, had the biggest decline in the index. The cruise-ship operator dropped 12 percent on a toxic mix of weak pricing, poor European demand and renewed curbs on Cuban tourism.

Kroger (KR) followed with an 8 percent decline after announcing results. Try as it might to reinvent itself as a high-tech digital story, investors still view it as an old-fashioned grocery with lots of debt.

Last week also saw the direct listing — rather than initial public offering (IPO) — for Slack Technologies (WORK). The messaging stock spiked more than 9 percent above its reference price when trading began on Thursday, followed by a 3.6 percent drop the next session.

This Week’s Agenda

This week marks the end of the second quarter. It brings some noteworthy economic reports, although geopolitical news involving Chinese trade could be a biggest catalyst going into the G20 summit on Friday and Saturday.

Tomorrow’s agenda features consumer confidence and new-home sales. Lennar (LEN), Micron Technology (MU) and FedEx (FDX) report earnings.

Durable-goods orders and crude-oil inventories are the big items Wednesday, followed in the evening by the first Democratic presidential debate.

Initial jobless claims and the final revision of first-quarter gross product are due Thursday. Walgreen Boots (WBA) and Nike (NKE) also issue results.

Friday marks the beginning of the G20 summit in Japan. Given the time difference, news from the event may be public by regular session in the U.S. Personal income and spending come out as well.

The following week brings key monthly employment data but could be quiet because of the Independence Day holiday.