A sluggish week in the equity markets had the feel of the beginnings of summer and the approaching July 4th holiday. Last week’s 0.37% slide took the S&P 500 index into negative territory for the month of June. The index currently sits 1.19% below its all-time closing high on May 21, 2015. Our old friend Greece continued to cast a shadow, for better or worse, over markets around the globe.
Stocks opened up last Monday on optimism of, you guessed it, a future Greek debt deal. The upward momentum was helped along by a positive print in U.S. existing homes sales, which hit 5.35M, the highest level since November 2009. Profit taking later in the session resulted in a still healthy 0.61% return to start the week. The index eked out a small gain of 0.7% on Tuesday, though it fluctuated throughout the day on positive new home sales and negative durable goods orders data.
The rest of the week did not go as well. Wednesday saw GDP data on the home front meeting expectations, but Monday’s optimism of a possible Greek debt deal turned negative and led to a -0.73% loss, erasing the gains from Monday and Tuesday. Thursday brought positive economic news with higher than expected personal spending and U.S. initial jobless claims of 271k. This was higher than the previous week’s 267k, but slightly better than the consensus estimate of 273k.
Of course, the big headline for the week was Thursday’s Supreme Court decision on the Affordable Care Act, which gave a boost to health care stocks, but not much else. Friday was mixed, and essentially flat for the day. Overall, seven of the ten economic sectors had negative performance for the week.
For what it is worth, our sense is that Greece will find itself on the outside looking in vis-a-vis the Eurozone, and that Europe’s other problematic countries (Italy, Spain, Portugal, et al) will take notice and be forced to institute the necessary reforms that Greece has been unwilling to undertake. It will not be a smooth process, and we expect volatility along the way. We would also keep an eye on France.
Happy July 4th to all!