It was a month of ups and downs, but June managed to end on the front foot, with the S&P 500 climbing 2.2% and Nasdaq returning 5.5%. The Dow was the outlier, falling -0.08%. For the S&P, it was the fifth straight month of positive returns.

But June was not without its moments of drama, brought to you in part by the Federal Reserve’s Open Market Committee. Following its mid-month meeting, Chairman Powell and team released a statement that confirmed the Fed’s commitment to keeping interest rates low and to continuing its bond purchases. At the same time, however, the central bank projected two hikes in the Fed funds rate by the end of 2023. This was not well received by investors. The Dow subsequently ended the week with its biggest loss since October of last year, down -3.45%. The S&P 500 fell -1.9%.

Inflation numbers were another source of disruption. The May Consumer Price Index (CPI) rose 0.6%, the second-largest jump in more than a decade. Year-over-year, the CPI was up 5%, the biggest annual gain since August 2008.

Commodities were a mixed bag. Oil jumped to its highest level since October 2018 on growing demand and a tightening market. Bloomberg reported that its Commodities Spot Index was up 78% from the March 2020 lows, in spite of a recent pullback. On the other hand, the price of lumber, inflation’s most recent poster child, fell more than 40% in June, from about $1,267 per thousand board feet to around $737, the biggest monthly drop on record (Source:, 6/30/21).

Yields on 10-year treasury continued to confound inflation worriers, falling from 1.61% at the start of June to about 1.4% at month’s end. Employment numbers were good, but not great, with 559,000 new jobs added in May. This was judged by investors to be a positive outcome –enough new jobs to suggest that the recovery was ongoing, but not so strong as to encourage the Fed to act. The unemployment rate fell to 5.8% from 6.1% the month before.

The spend a trillion sweepstakes continued in Washington as Biden and Congress reached a bipartisan agreement on “overhauling the nation’s transportation, water and broadband infrastructure,” as reported by The Wall Street Journal. The plan now awaits legislative approval.

Volatility aside, investors had little to complain about as the month and the first half came to a close. Year-to-date, the S&P 500 gained 14.4% through June 30, its second-best performance since the Dotcom era. The global economy continued its recovery, albeit unevenly. Domestically, the Fed lifted its 2021 GDP forecast up slightly to 7% from 6.5%, and projected growth of 3.3% and 2.4% for 2022 and 2023, respectively.

Heading into the last earnings season to annualize 2020’s economic shutdown, FactSet was projecting earnings growth of better than 60% for the S&P 500. While a slowdown from this pace is recognized as inevitable, the timing and magnitude are up for debate. Expectations will again play a big role in how markets react. 

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The S&P 500® Index is widely regarded as the standard index for measuring large-cap U.S. stock market performance.

Nasdaq is used to refer to the Nasdaq Composite, an index of more than 3,000 stocks listed on the Nasdaq exchange The Nasdaq Composite contains all of the companies that trade on the Nasdaq. Most are technology and internet-related, but there are financial, consumer, biotech, and industrial companies as well.

The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Bloomberg Commodity Spot Index measures the price movements of commodities included in the Bloomberg Commodity Index and select subindexes. It does not account for the effects of rolling futures contracts or the costs associated with holding physical commodities and is quoted in USD.

The GDP – Gross Domestic Product -- is the total of all value added created in an economy. The value added means the value of goods and services that have been produced minus the value of the goods and services needed to produce them.

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