The June Institute for Supply Management (ISM) Services Index was a bit softer than expected (60.1 vs. the Bloomberg consensus estimate of 63.5), although the overall reading remained near multi-year highs. The June figure also came in lower than May’s reading of 64.0. Survey respondents were bullish on many components of the overall index, including remaining order backlogs that needed to be filled and pricing power. However, supply managers did point to the proper availability of labor as a chief concern.  The labor component was down sharply from previous months. In sum, the overall index points to an economy firmly on the mend,

To quote the great Frank the Tank from Old School, “We’re going streaking!” Although Frank had another idea, stocks have been streaking in some historic ways, both near-term and longer-term.

Let’s start with the more recent action. The S&P 500 Index was recently higher seven consecutive days for the first time since last August, but even more impressive is it made new highs all seven of those days. You have to go back to June 1997 to find the last time we saw a streak like that! Incredibly, this has happened only eight other times since 1950 and stocks were higher a year later every single time.

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Stocks are choppy in typical year two fashion. Yet, many worries are creeping in, with the recent Krispy Kreme IPO near the top of the list.

Year Two Mess

Year two of bull markets is usually strong, but it can also be quite messy. Ryan noted that this bull market won’t be much different than the others and a choppy mess the next few months could be perfectly normal. Scott discussed how market breadth has been weak, even with stocks making new highs. In other words, he has some yellow lights flashing.

The Krispy Kreme Indicator

Ryan noted that although he is a fan of Krispy Kreme doughnut

Index Performance (as of 1:45 PM EST)

U.S. and International Equities

US large cap indices extended gains from last week, led by the growth-heavy Nasdaq Composite. However, small caps (Russell 2000) equities bucked the trend and finished lower. International markets (MSCI EAFE and MSCI EM) were also lower for the week.  

Growth Sectors Lead

This week was positive for many value sectors such as materials and industrials, however growth sectors such as information technology, communication services, and consumer discretionary saw the biggest gains, along with healthcare. As the economic reo