By Mosaic Financial Partners The US stock market reached more record highs during the second quarter of 2014. The S&P 500 Index (SPX) posted a solid 5.2% gain during the period. The continuing bullish trend resulted in both the Dow Jones Industrial Average (DJIA) and S&P 500 indices recording a series of all-time record high closes during the quarter. The Nasdaq (COMP) reached heights it hadn’t seen since March 2000. International markets also showed solid returns during the second quarter. The MSCI Europe Australia Far East Index (EAFE) had a 4.3% gain, while the Japanese Nikkei 225 (NIK) market rose 6.7% during the quarter. The emerging markets also enjoyed a strong quarter, posting their best quarterly returns since 2012. The MSCI Emerging Market Index rose 6.7% for the quarter (led by China's rise of 5.7% and India's +12.7%). The Fixed Income sector (bonds) stabilized during the second quarter. As of June 30th, the 10-year Treasury yield stood at 2.53% (0.2% lower than the 1st Quarter). The Federal Reserve Bank continues to support low interest rates, but has been confident enough about the state of the economy to continue reducing its bond purchases. Assuming no change in its plans, the Fed expects to cease bond purchases by October. Thereafter, subject to economic conditions, the Fed may begin to slowly increase its base interest rates. On the geopolitical front, with Iraq, Ukraine and Syria as sources of global anxiety, concern over oil supplies pushed oil prices above $107.
The U.S. economy contracted in the first quarter of 2014 as consumer spending declined. The decline in GDP was the largest experienced since the depths of the last recession. The U.S. Labor Department revised its Q1 estimate to reflect a GDP decline of 2.9% (annualized ). This is the worst reading since Q1, 2009.