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Nasdaq And Russell 2000 Index Make New All-Time Highs - Again!

The markets closed mostly higher yesterday, with the tech-heavy/small-cap dominated Nasdaq and the Russell 2000 Small-Cap Index leading the way.

Not much news regarding trade or tariffs yesterday.

But there was plenty to talk about regarding the historic US/North Korea summit.

Sadly, the media coverage seemed to fall into their respective partisan camps. But there was no denying the meeting was historic. And I'd much rather see our leaders talking to one another rather than saber-rattling. I cheered the Reagan/Gorbachev summit. We, of course, now know that it led to the end of the Cold War. Only time will tell what comes out of the Trump/Kim Jong Un summit. But it was a good start.

But as I said before, the markets didn't move one way or the other leading up to the talks, and didn't seem to move either way after the talks. While we all hope for peace and a denuclearized North Korea, the odds are long that it will happen anytime soon, so there's no real peace dividend to build in yet. And if the talks do nothing, there's no real new downside threat to factor in either given the world's been living with a belligerent, nuclearized NK for years. So while the world remains fascinated and hopeful by the talks, there's been virtually no impact to the markets thus far.

Why did the markets go up yesterday? Why shouldn't they? The economy is firing on all cylinders, corporate profits are surging, and consumer confidence is at an 18-year high. The markets should be going up. And keep going up!

Last week I commented on how Warren Buffett and Jamie Dimon were extolling the virtues of the economy and the market. Well, we heard from another legendary investor – Paul Tudor Jones, echoing the same sentiment. Yesterday he said he thought the market would be "phenomenal" in the second half of the year with stocks moving "significantly" higher.

He also believes interest rates will move up as well and considers that a positive development.

That's good to hear because later today, the Fed is widely expected to raise interest rates by 25 basis points, bringing the Fed Funds range to 1.75%-2.00% (mid-point of 1.875%).

That will further show the Fed's confidence in the economy and the belief that it's strong enough to handle it.

As I've said before, I think the economy is in a sweet spot right now. That should continue for quite some time. And the market should be the big winner because of it.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research

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