The three major domestic equity indices ultimately ended in positive territory for the second quarter, after zigging and zagging on headline news, particularly toward the end of June. Volatility due to the threats of escalation on trade continues to be an overhang on the market, explains Ed Mills, Raymond James managing director of equity research and Washington policy analyst. In the past month, the administration has threatened an additional $400 billion worth of tariffs on Chinese goods, and reports circulated that the administration had planned to invoke an emergency economic power to restrict Chinese tech investment in the United States and implement export controls on technology transfers.

Uncertainty, in this case regarding global trade tensions, often leads to concern among investors. And it seemed investors were trying to digest somewhat conflicting reports of peak earnings, tariff threats and political divisiveness, shrinking yield spreads, lower unemployment and gradually rising inflation.

Foreign financial markets weathered an eventful month as well, as global tariffs hurt these traditionally more open economies. However, Raymond James European Strategist Chris Bailey believes that any lessening of these concerns – which remains very plausible – provides investment opportunities.

Despite end-of-the-month volatility, all of the major domestic equity indices were up for the second quarter. A longer view shows that the NASDAQ, the Standard & Poor’s 500 and the Russell 2000 ended the first half of the year in healthy territory, but the Dow Jones Industrial Average didn’t keep pace.

12/29/17 Close 6/29/18 Close Change
Year to Date		 % Gain/Loss Year to Date
DJIA 24,719.22 24,271.41 -447.81 -1.81%
NASDAQ 6,903.39 7,510.30 +606.91 +8.79%
S&P 500 2,673.61 2,718.37 +44.76 +1.67%
MSCI EAFE 2,050.79 1,958.64 -92.15 -4.49%
Russell 2000 1,535.51 1,643.07 +107.56 +7.00%
Bloomberg Barclays Aggregate Bond 2,046.37 2,012.55 -33.82 -1.65%
Performance reflects price returns as of 4:30 EDT on June 29, 2018.
Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc., and are subject to change. Past performance is not an indication of future results and there is no assurance that any of the forecasts mentioned will occur. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Small and mid-cap securities generally involve greater risks. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. The performance noted does not include fees or charges, which would reduce an investor’s returns. Asset allocation and diversification do not guarantee a profit nor protect against a loss. Debt securities are subject to credit risk. A downgrade in an issuer’s credit rating or other adverse news about an issuer can reduce the market value of that issuer’s securities. When interest rates rise, the market value of these bonds will decline, and vice versa. Price/Earnings Ratio is the price of a stock divided by its earnings. It gives investors an idea of how much they are paying for a company’s earning power. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. Chris Bailey is with Raymond James Euro Equities, an affiliate of Raymond James & Associates, and Raymond James Financial Services. Material prepared by Raymond James for use by its advisors. Not approved for rollover solicitations.