Weekly Market Outlook (June 12th)
All eyes in the investing world this week will be on the Federal Reserve’s next meeting on Wednesday when economists and financial pundits are expecting the central bank to approve a rate increase of a quarter of a point.
An increase would be a critical vote of confidence in the U.S. economy at a time when investors are getting mixed signals. Though unemployment is at a 16-year low of 4.3 percent, the rate of jobs growth has decelerated in recent months. Wages also continue to be stagnant, and GDP grew at 0.7 percent in the first quarter, its slowest pace since 2014. President Donald Trump’s promise to boost GDP growth to 3 percent strikes many economists as unrealistic.
Wall Street also is keeping a close eye on the political soap opera in Washington, D.C., over allegations of Russian collusion in the presidential election with members of the Trump Campaign, which President Trump has vehemently denied for months. The prospect of a “Hung Parliament” in the U.K. also is weighing on stocks ahead of the start of critical Brexit negotiations with the European Union.
Among the companies making news Monday are General Electric, which announced CEO Jeffrey Immelt would retire as the head of the conglomerate on August 1 and would leave the company entirely by the end of the year. Immelt 16-year tenure, which is more than double the average tenure of a CEO in the S&P 500, has been controversial since GE has underperformed the broader market. Activist investor Nelson Peltz among others has been clamoring for change. Shares of GE were trading up on the news Monday in the hopes that Immelt’s successor John Flannery might be more amenable to splitting the company.
In other news, shares of Apple are trading down Monday after a downgrade from Mizuho Securities, dragging down the tech-heavy Nasdaq index. The Dow Jones industrial average and the S&P 500 Index were also trading down Monday morning.