As markets enter the final trading day of June and the second quarter, the S&P 500 is on track to register its fifth consecutive month of gains. The three biggest winners in the Dow this year so far are Goldman Sachs, American Express, and Walgreens Boots Alliance, all up more than 30% (CNBC). The technology and health care components of the S&P 500 both closed at record highs this week, and every sector is now firmly in positive territory for the year.
Bonds saw positive returns for the month as well, with the Bloomberg Barclays Aggregate index up 0.6% for the month (-1.7% year-to-date) and the municipal index up 0.2% (month) and 1.0% (year-to-date). As far as economic data is concerned, private sector employment in the ADP report rose by 629,000 in June, above consensus expectations. Investors will be watching the more widely followed monthly U.S. non-farm payrolls report due out on Friday. The June report follows a disappointing print of 266,000 jobs in April, followed by 559,000 new jobs added last month. Expectations are for 675,000 added to non-farm payroll for June, with the unemployment rate to declining from 5.8% to 5.7%.
Last week, a $2 trillion bipartisan infrastructure deal was reached in the U.S. The proposal will likely be modified as it moves through Congress, but much of it could be signed into law by the end of 2021. With a combination of fiscal spending and tax credits, the plan has many objectives impacting infrastructure investment, including decarbonizing the U.S. economy, accelerating the digital rollout into rural areas, upgrading critical water infrastructure, and expanding social care (MFS). COVID continues to be an issue outside the U.S. The delta variant has been spreading through the U.K. and, in fact, much of Australia is now under lockdown. Should this new variant become a greater issue in the states, we could see a return to the stay-at-home trade.
Source: GSAM, CNBC, MFS, Factor Investor