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Summer Swoon?

The summer is a seasonally weak period for stocks and June, in particular, has posted poor performance over a long period of time. Over the past 30 years, the S&P 500 has traded positively in the month of June only 55 percent of the time. And it has lost an average of 0.49 percent.

Yield Curve Inversion-Take 1

Although an inverted yield curve has been a reliable recession signal, it hasn’t been very useful for investors: Stocks have risen over the following year about half the time. Recessions have followed, but the lag has ranged from six months to almost three years.

Yield Curve Inversion-Take 2

Not all inversions are created equal, many compare the current scenario to the situation seen in 1998. When the yield curve inverts because demand for the 10-year Treasury is driving rates lower, it tends to reflect growing worries about risk rather than predicting a slowdown in the business cycle.

Correction Territory

Stocks in May closed out their worst month since December as trade tensions ratcheted higher. Small-caps, although typically viewed as less sensitive to trade disruptions than their larger peers, performed worst, and the S&P MidCap 400 Index joined the small-cap Russell 2000 Index in correction territory, or off more than 10% from their late-August 2018 highs. The S&P 500 Index moved below its 200-day moving average, considered an important threshold by some traders.