2019 Mid-Year Market Update

July 10, 2019

Dear Valued Customer,

As the second quarter has come to a close, the US economic expansion entered into its 121st month, marking the longest uninterrupted expansion in modern American history. Despite increased speculation that a downturn will shortly be upon us, it is important to remember that economic expansions halt due to a policy misstep or when a growing imbalance in the economy surfaces, not due to the length of the expansion itself.

Markets were positive across the board during the second quarter as the S&P 500 Index returned 4.3%, Mid Cap returned 4.1% and Small Cap increased 2.1%. Year to date returns have been strong for domestic markets, with the S&P 500 Index up 18.5%, Mid Cap up 21.3% and Small Cap up 17%, through June 30th, 2019. Despite the decline in interest rate yields, Financials have been the best performing sector over the second quarter, returning 8%, with Materials and Information Technology close behind, increasing 6.3% and 6.1%, respectively.

In looking at leading economic indicators year to date the results have generally been positive. Employers added 224,000 jobs in June while the unemployment rate rose to 3.7%, up from a 49 year low of 3.6% in May. Gross Domestic Product, the final value of all goods and services produced within the U.S., grew at a strong 3.1% in the first quarter. Core Inflation is used to determine the impact of rising prices on consumer income. This indicator is measured by the change in the costs of goods and services, excluding those from the food and energy sectors due to their volatility, and increased an annual 2.0% ending May 31st, 2019, meeting the Fed’s expectations. The US Federal Reserve held rates steady in June at a target range of 2.25-2.50%, and indicated the case for an accommodative policy increased as the global economy slowed. Traders are pricing in an 80% chance of a 25 basis point cut and a 20% chance of a 50 basis point cut following the next Federal Open Market Committee meeting, to be held July 30th -31st.

Trustco Bank’s Financial Services Department designs unique portfolios tailored to meet your needs, taking into consideration your financial goals, risk tolerance and time horizon. Our Department’s investment philosophy of designing portfolios for long term growth and income is accomplished through implementing diversification within each portfolio, and investing in high quality equities and fixed income securities. Trustco Bank is committed to a consistently high quality client experience, serving you with expert advisors while keeping your portfolio on track as you continue toward your financial goals. We welcome the opportunity to meet with you and help you reach your financial goals.

Best Regards,

Patrick J. LaPorta - Administrative Vice President

Lauren A. Maxwell, CTFA - Investment Officer

Investment Products - Not FDIC Insured. Not a deposit. Not insured by any Federal Government Agency. Not guaranteed by the bank. May go down in value.

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Investment Products - Not FDIC Insured. Not a deposit. Not insured by any Federal Government Agency. Not guaranteed by the bank. May go down in value.