The S&P 500 and Nasdaq closed at new record highs, marking their strongest quarterly performance in over a year, driven by optimism surrounding trade deals with China and the UK and expectations of potential interest rate cuts by the Federal Reserve. Despite inflation concerns and geopolitical risks, investor sentiment remains buoyant heading into the second half of the year.
00:00The S&P 500 and Nasdaq reached new record closing highs on Monday,
00:05capping their best quarter in over a year as hopes for trade deals and possible rate cuts is investor uncertainty.
00:11Both indexes ended the quarter with double-digit gains.
00:18Trade deals with China and the UK have fueled optimism that an all-out global trade war can be minimized
00:24with hopes for more deals to be reached before President Donald Trump's July 9 trade deadline.
00:30Clearly, the Middle East situation, kind of having died down, especially last week,
00:35is lending a little bit of credence to the relief rally construct.
00:38I expect that to kind of be a very fluid situation.
00:41Should that dynamic change in the Middle East, we could see a little bit of a scare, spark things again.
00:47But in general, I'm expecting anything that's positive and constructive to be fed through into the stock market as well as bonds.
00:55With regard to the Fed cutting rates, one of my thoughts is that a lot of the noise,
01:00has started to come out with regard to sooner cuts rather than later.
01:03I'm a little skeptical of that personally because I think the inflationary environment could ramp up again.
01:08As we saw on Friday with the PCE data moving slightly higher, 2.7% away from the 2.5, 2.6% area we had been in of late.
01:18I'm expecting a little bit of a challenge for inflation going forward.
01:22And I expect that to kind of come more to fruition as we move forward into the year.
01:26Therefore, I don't expect, I'm not as forward thinking with regard to the Fed being on their front foot with cutting rates more aggressively rather than less.
01:35A lot of people are suggesting a September cut is in the mix.
01:38It certainly could be, but at this point, I don't see that happening.
01:41I'm only expecting one cut at most this year.
01:43The end of the quarter was also influenced by managers operating stocks to make their financial statements or portfolios look more attractive at the end of a reporting period.
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