A Q2 ETF Roundup

The first half of the year is already over. Yes, I know it feels like we just kicked off 2015, but this weekend we celebrate our nation’s birthday. To me, the July 4th holiday represents the unofficial break before we get back to business in the second half of the year.

So, how did things shake out during the first half of the year? How about during the second quarter?

Let’s start with domestic stocks in the S&P 500 with the chart here of the SPDR S&P 500 (SPY). The benchmark measure of domestic equities faltered in the final week of the quarter, with SPY now trading below its short-term, 50-day moving average.

Although the fund still remains above its long-term, 200-day moving average, the performance in Q2 is nothing to boast about. During Q2, SPY was basically flat, down 0.28%. Year to date, SPY has managed to eke out a total return of just 0.15%.

That’s the definition of dead money.

Unfortunately, the action was worse outside of the United States, with the iShares MSCI EAFE Index ETF (EFA) down 1.06% in Q2. Despite the pullback during the second three months of the year, EFA’s first quarter has kept its year-to-date performance strong with a 4.36% total return.

The other big international market segment we like to track is emerging markets. In Q2, the iShares MSCI Emerging Markets ETF (EEM) also gave back ground, falling 1.27%.

Through the first half of 2015, EEM still is in the black, but only slightly, with a 0.84% total return.

The table below shows the performance — in Q2 and year to date — of eight key market sectors we watch on a daily basis.

The big takeaways from the data here are the following:

1. Global equity markets are backing off after a great start to the year.
2. Large-cap tech stocks in the QQQ continue to attract capital.
3. Bond prices have come under pressure during Q2 and for the full year.
4. Gold prices remain slightly lower.
5. Oil prices have really come back off the canvas, up nearly 20% in Q2. Yet even with that big second-quarter move, oil prices remain about 4% below where they were at the beginning of the year.

So, what will the second half of 2015 bring for markets?

Before we get any read on that, we’ll have to get past the ongoing mess that is the Greek bailout negotiations. If Greece fails to stay in the European Union, that will throw a big wrench into the global market machinery.

The market also will need to get some definitive clarity on what the Fed is likely to do with interest rates. Will there be a “one and done” rate hike in 2015? Or, will the Fed put off hiking rates until next year? What happens if the Fed hikes rates not once, but twice this year?

These unknowns are all pending, and their outcome will determine what’s next for stocks, bonds, currencies, commodities — and most importantly, your money.