John Hancock: Weekly Market Recap Week Ended June 12th

Swift reveral

Before Thursday’s market rout—which saw the Dow plunge nearly 7%—the major stock indexes had passed some big milestones. On Monday, the S&P 500 briefly returned to positive territory year to date; on Wednesday, the NASDAQ closed above 10,000 for the first time.

Recesson declaration

The National Bureau of Economic Research (NBER) determined that the U.S. economy entered a recession in February, ending a decade-long expansion. A recession is typically defined as two consecutive quarters of negative GDP, but the NBER has leeway to consider the depth of a contraction, how quickly it occurs, and how much of the economy is affected.

Fed’s gloom

A key turning point for the markets came after U.S. Federal Reserve Chairman Jerome Powell on Wednesday warned that the U.S. economy faces a long road to recovery, with unemployment likely to remain elevated for years. Earlier, the Fed signaled that it expects its benchmark interest rate will remain near zero until 2022.

Consumer comeback

U.S. consumers are increasingly optimistic about the economy, based on results of a survey released on Friday and conducted in early June. The findings from the University of Michigan boosted its sentiment index to a higher-than-forecast 78.9, versus just 72.3 a couple weeks earlier.

Source: https://wmr.jhinvestments.com/