What To Do if You Encounter a Bear

U.S. equities staged a strong rally in June, capping a stellar return for the first half of the year. The benchmark stalwart, Apple, became the first company ever to close with a greater than $3 trillion market cap. The stock has climbed more than 45% so far this year, along with other technology-related stocks, which drove a 32% return for the Nasdaq Composite, the best first-half return for the index since the 1980s. Despite investors’ continued interest in the Information Technology sector, the more cyclically oriented Industrials and Materials sectors had impressive double-digit returns in June. Investors continued to show a willingness to increase the amount they will pay for a dollar of earnings (known as price/earnings (P/E) multiple expansion), sustaining the tailwind driving major averages higher.

The Federal Open Market Committee opted to pause the process of rate hikes in their June meeting, noting a consensus among members that two additional hikes are likely by year-end to bring inflation under control. The “hawkish pause” decision comes after hikes in 10 consecutive meetings since March 2022, the most aggressive monetary tightening since the 1980s. Any indication that the current rate hiking cycle is nearing an end has been welcomed by investors.