U.S. Versus International
The S&P 500, an index of large U.S. companies, posted a total return of 3.1% for the 13 weeks ending June 30, 2017. U.S. stocks lagged behind International for the quarter as measured by the All Country World Index ex-U.S. stocks, a representation of international stocks outside the U.S. Total return for the 13 weeks ending June 30, 2017, was 5.6%.
Chinese and European stocks outperformed for the quarter. A falling U.S. dollar value helped buoy international stocks as worries of slowing U.S. growth crept into markets. Expected strength in Hong Kong GDP growth for the second quarter, driven by domestic consumption growth, spurred Asian outperformance.
Since the beginning of the year the U.S. dollar value has fallen versus international currencies. Europe and Canada have shown signs of winding down easy money policies, which has propped up their currencies. A falling U.S. dollar is positive for foreign stocks purchased in U.S. dollars. Latin America stocks stumbled in the quarter as political turmoil and weak energy prices continue to weigh on shares.
U.S. Sectors
Top performing U.S. sectors for 13 weeks ending June 30, 2017, by total return included Healthcare (+7.3%), Industrials (+4.3%) and Financial Services (+4.2%). Laggards for the 13-weeks include Energy (-7.7%), Communication Services (-1.4%) and Consumer Defensive (1.2%). Sector rotation in market prices is high, as investors volley between popular technology stocks and market laggards such as financials.
Energy stocks continue to suffer as supplies remain higher than expected throughout the second quarter. Supply cuts by OPEC nations have been offset by strong production in the U.S. and countries not subject to supply cuts. Energy stocks were poised for a rest in 2017, following an advance of 28% in 2016 and 7% in the fourth quarter alone.
Technology stocks, the top performing sector year-to-date, remained relatively strong rising 4.0% for the quarter. Strong growth and innovation in the technology sector continue to drive interest in the stocks. Technology stocks began to show weakness at the end of the quarter, as concerns of over-valuation began to materialize.