This June will be entering the 99th month of the second longest bull market in history. Looking forward, Trump’s tax-reform bill, infrastructure spending plan, or additional regulatory relief could be the next catalyst needed to continue this bull market. Investors are waiting for more details on substance and time tables in regards to Trump’s proposed reforms and crossing their fingers that the progress can be made before 2018.
In addition, corporate profits have continued to rebound as earnings reports strengthen. The earnings tailwind has been one of the driving forces of recent market gains. Revenue growth for the S&P 500 in the most recent quarter was 7.8 percent, the strongest level of growth experienced since 2011.
Furthermore, commodities have stabilized this year as precious medals have outperformed oil in the past year. Analysts at Goldman Sachs believe oil prices will continue to consolidate around $50 per barrel for the next coming years.That means good news for family road trips this Summer as the average price for a gallon of gas in Michigan was about $2.42 per gallon. That’s almost 8 cents less than last year at this time.
Also in recent news U.S. factory activity ticked up in May after slowing for two straight months and private employers stepped up hiring. The economy grew at a 1.2 percent annualized rate in the first quarter. Additionally, the ADP National Employment Report showed private payrolls increased by 253,000 jobs last month, beating economists’ expectations for a gain of 185,000 jobs. The signs of renewed vigor in the economy and labor market could encourage the Federal Reserve to raise interest rates later this month. The U.S. central bank announcement will be made on June 14th and we expect a gradual increase of interest rates into 2018.
– Timothy Hooker, Accredited Investment Fiduciary, Chief Compliance Officer and Private Wealth Manager (Tim@GoDWS.com)