Whoa, we’re half way there, whoa-oh, livin’ on a continued economic recovery from COVID. Ok, maybe not quite as catchy as the original Bon Jovi lyrics, but just like that we are already halfway through 2021.
Apparently markets missed the “June Swoon” memo this year as the hot market summer rolled on. Major US indices continued to roll as the S&P 500 gained 2.22% and the tech-heavy Nasdaq surged 5.49%. Growth companies clawed back some ground relative to value companies as falling interest rates helped ease investor concern.
Speaking of falling interest rates, bond indices continued their recent winning streak as the 10-year Treasury bond yield fell from 1.58% to 1.45% (bond prices move inversely to yields, so when yields fall prices tend to move higher). Despite a third consecutive month of gains, the US Aggregate Bond Index is still negative at -1.60% for the year.
Overseas, developed international stocks once again outpaced emerging market stocks due to the slower vaccine rollout being experienced in many less-developed countries.
Looking ahead to the second half of the year, experts believe there is still room for the bull market to run, though there could be higher volatility along the way.
Facebook is the most recent company to join the four-comma club as the social media giant reached a $1 trillion market capitalization.
The company is the fifth US company to reach this milestone (Apple, Microsoft, Amazon, and Alphabet).
For those of you wondering how a social media company could grow so large (how do they even make money) – Facebook generates almost all of its revenue from personalized ads that appear on its platform.
Specifically, 97.9% of Facebook’s total revenue came from advertising (again, almost all of its revenue).
Moving forward, the company faces ongoing scrutiny from regulators regarding antitrust laws (i.e. claims that Facebook is becoming a monopoly).
The Pacific Northwest may be experiencing a record heat wave this summer, but that is nothing compared to how hot the housing market has been.
US home prices rose 14.6% year-over-year in the most recent month. This is the fastest pace on record since the S&P CoreLogic Case-Shiller National Home Price Index began in 1987.
What’s sparked higher prices? A combination of continued low mortgage rates, a recovering economy, and a shortage of homes for sale (lower supply with steady demand).
While there are parallels to the housing bubble that sparked the 2008 financial crisis, many experts predict we won’t see a similar ending (loans are more difficult to qualify for and economists believe demand will start to dwindle soon as homebuyers get burnt out from frenzied bidding wars).
Broad Market Returns
| Index | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | 2.26% | 8.39% | 15.29% | 40.97% |
| NASDAQ (QQQ) | 6.26% | 11.19% | 13.24% | 43.96% |
| Large Cap Growth (VUG) | 6.02% | 11.73% | 13.53% | 42.85% |
| Large Cap Value (VTV) | -1.24% | 5.13% | 16.82% | 41.47% |
| Small Cap Growth (VBK) | 4.72% | 5.62% | 8.46% | 45.92% |
| Small Cap Value (VBR) | -1.01% | 5.26% | 23.06% | 65.65% |
| Developed International (VEA) | 3.58% | 5.76% | 10.53% | 36.43% |
| Emerging Markets (VWO) | 1.33% | 4.89% | 9.09% | 40.20% |
| REITs (VNQ) | 2.64% | 11.60% | 21.41% | 34.45% |
| Aggregate Bonds (BND) | 0.90% | 1.93% | -1.78% | -0.59% |
| Corporate Bonds (VCIT) | 1.12% | 2.76% | -1.23% | 2.49% |
| High Yield Bonds (JNK) | 1.32% | 2.14% | 2.77% | 14.06% |
| Long Term Treasuries (VGLT) | 4.17% | 6.44% | -7.80% | -10.56% |
| International Bonds (BNDX) | 0.37% | 0.18% | -2.12% | -0.02% |
Fun Facts – July Edition
- July was originally named Quintilis, the Latin word for “fifth” (it was originally the fifth month of the year until January and February were added later). In 44 BC, the month was renamed Julius to honor the birth month of Julius Caesar following his death (hence July).
- July is the warmest month, on average, for the Northern Hemisphere. The phrase “the dog days of summer” refers to the typically hot and humid period of 40 days, beginning on July 3.
- July is National Watermelon Month, National Hot Dog Month, and National Ice Cream Month (helping us keep those summer beach bodies in shape).
- On July 16, 1969, Apollo 11 launched into space. Four days later, Neil Armstrong became the first person to walk on the moon.
Derek Prusa, CFA, CFP® and Ben Webster, CFP®
Co-Founders and Owners of Aspire Wealth
June 2021 Newsletter
