Stocks today finished their best June in decades, capping a strong first half of 2019 and a big rebound from May’s market downer.

The good news is tempered by the fact that investors relied on five giant companies for a third of the gains over the past quarter, reflecting the digital economy’s remarkable growth and its potential for fragility.

Three of the Standard & Poor’s 500 index leaders — Facebook, Apple and Amazon — have come under scrutiny from regulators and politicians in the last several months for their consumer dominance.

Microsoft and Walt Disney round out the big five performers.

The five companies together are worth more than $3.4 trillion as measured by the price of their stock. That is 14 percent of the combined value of all the companies in the S&P 500, according to Howard Silverblatt of S&P Dow Jones Indices.

”I would prefer broader market leadership and not such a narrow focus,” said Charlie Toole, portfolio manager at Adviser Investments. “When you have one or two or four names leading the market, you worry that if they trip up, it’s going to trip up the entire market.”

All three indexes are up on the year, with the S&P 500 climbing 17 percent in the first six months, the Dow Jones industrial average registering a 14 percent gain and the technology-heavy Nasdaq composite index leading everybody with 20 percent.

All three are close to their all-time highs on a June bounce following remarks from Federal Reserve Chair Jerome Powell that “we will act as appropriate to sustain the expansion.”

  • The Dow closed at 26,599, up 73 points on Friday to finish June with a gain of 7.1 percent.
  • It was its best first half since 1999 and best June since 1938, when it surged 24 percent.
  • The S&P 500 closed at 2,941, up 16 points on the day and up 6.89 percent for June.
  • The broad market posted its best first half since 1997.
  • It was the S&P’s best June since 1955, when it climbed 8.2 percent.
  • The Nasdaq composite finished up 38 points at 8,006, pushing its June rally to 7.4 percent.
  • That’s the Nasdaq’s best June since 2000, when it gained 16.6 percent.

Stocks got a boost on several fronts toward the end of the week.

The Federal Reserve signed off on stock buybacks and dividends for 18 big banks, spurring a rally in financial stocks.

U.S. consumer spending in May increased moderately, feeding hopes for a Federal Reserve interest rate cut.

Consumer sentiment rose slightly above forecasts, although the measure has slipped since early May, when it posted a 15-year high.

President Trump’s obsession with rising stock prices has been one of the hallmarks of his presidency.

Earlier in the week he thanked himself for the bull market:

Today he tweeted about it from the G-20, suggesting his 2016 opponent Hillary Clinton would have made the markets crash:

Between Trump’s stock market obsession and the Federal Reserve’s willingness to use the money supply to bolster returns, some investors believe there is a safety net under the stock market.

“We have to recognize the power of the Fed,” said Kristina Hooper, global market strategist at Invesco. “The Fed has placed a ‘put’ under the stock market over the past decade and could do so once again.”

 

Attribution:The Washington Post
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