U.S. equity markets advanced 3.9% (Russell 3000) on solid earnings, economic growth and a tightening labor market.
International equities underperformed domestic equities with a 2.6% loss over the quarter (MSCI ACWI ex U.S.) on trade tensions, moderating growth and a stronger dollar.
The U.S. fixed income market posted a 0.2% loss (Barclays Aggregate) as interest rates increased modestly. Additionally, the yield curve continued to flatten during the quarter.
Unemployment fell to 3.8% in May, which marked an 18-year low.
First quarter GDP growth was reported at 2%. Second quarter GDP growth is expected to have accelerated from that level.
Large growth continued to outperform large value this quarter with the Russell 1000 Growth outperforming the Russell 1000 Value by 4.6%.
As trade tensions escalated, U.S. small companies outperformed large caps. Small companies typically derive a larger percentage of revenues domestically. Therefore, they are more insulated from trade wars and are also larger beneficiaries of tax cuts.
