The month of June was outstanding for Wall Street. SPDR S&P 500 ETF (SPY) (up 6.7%),SPDR Dow Jones Industrial Average ETF (DIA – Free Report) (up 7%) and Invesco QQQ Trust (QQQ – Free Report) (up 9.8%)— the big three ETFs delivered stellar performances. The S&P 500 had its best June since 1955 and the Dow logged its largest June percentage gainsince 1938.
Dovish comments from the Fed were instrumental in driving the rally. Moreover, stocks suffered a lot in May due to renewed trade tensions, which resulted in cheaper valuation of stocks in June. Interestingly, a dovish Fed boosted every key asset class – stock, bond and gold. Against this backdrop, below we highlight a few ETF events that were the highlights of the month.
Central Banks’ Dovish Comments
As widely expected, the Fed stayed put in its latest meeting but has hinted at rate cuts this year. The central bank will now “closely monitor the implications of incoming information for the economic outlook.” Though the Fed acknowledged the economic wellbeing, it said that “uncertainties about this outlook have increased.”
As a result, bond yields slumped with yield on benchmark treasury yield hovering around 2% at the mon-end – the half-yearly low. Invesco DB US Dollar Index Bullish Fund (UUP – Free Report) lost about 0.8% in the past month (as of Jun 28, 2019) (read: ETF Winners & Losers Post Fed Meet).
Not only the Fed, the ECB also adopted a dovish stance. The ECB pushed back the timing of its first-rate hike in nearly eight years to the second half of 2020 at the earliest during its June meeting, thanks to global growth concerns and tepid inflation outlook.
ECB president Draghi hinted that upcoming economic indicators point to persistent softness and the bank could add more stimulus, should the