Blog Wealth Management Management Retirement Planning

Inflation Still Running Hot – Market Brief Sept 19, 2022

jim Financial advisor, Investment Management, Market Brief, Retirement Income Planning, Retirement Planning, wealth management September 19, 2022September 19, 2022financial advisor, investment management, market brief, retirement income planning, retirement planning, wealth management

A high inflation report along with global recession fears sent equities falling, and transportation giant FedEx shook markets on Friday. Stocks fell for the fourth week in five, sinking to new September lows. The main indices all finished down last week; Dow -4.1%, S&P -4.7%, and Nasdaq -5.5%.

Last Week – Inflation reports

The S&P 500 Index returned -4.73% last week, posting its worst return since the week ending June 17. The S&P 500 Index returned -4.73% last week, posting its worst return since the week ending June 17. Consumer prices were expected to fall more than they did in August. Dropping energy prices did not offset the increasing food and shelter costs. This report confirms the Feds aggressive stance on continued rate hikes to slow down growth. At the end of the week, Fedex withdrew forward full-year guidance and reported the economic outlook was gloomy. In other data, Mortgage Rates moved over 6%, to 6.02% for the average rate on a 30-year fixed-rate mortgage. This is the highest rate in 14 years. Gas prices declined, and now average $3.69 per gallon.

Week Ahead

Three central bank rate decisions will be anticipated this week. All investors focus will be squarely on Wednesday’s Fed meeting. Annual inflation number did drop last month from 8.5% to 8.3%. But this is still very far from the Fed’s target inflation rate of 2.0%. Rumors of a 1% rate hike are floating around. Many traders are anticipating 0.75% rate increase and further increases at meetings to come. The U.S. labor market remains very strong. The tight labor market makes halting growth much more difficult. The Fed continues fighting the balance of slowing growth without pushing the economy into a recession.

Year-to-date index performance; Dow down 15.2%, S&P down 18.7%, and Nasdaq down 26.8% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Financial Advisor Erie CO focus on investment and wealth management, retirement planning; Boulder, Louisville, Niwot, Lafayette, Windsor, Berthoud, CO

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

What did the Fed Hint – Market Brief Aug 30, 2022

jim Financial advisor, Investment Management, Market Brief, Retirement Income Planning, Retirement Planning, wealth management August 30, 2022August 30, 2022financial advisor, investment management, market brief, retirement income planning, retirement planning, wealth management

U.S. equities fell for a second straight week at the hands of the Fed hint of future rate hikes. Markets sold off sharply on Friday after Fed Chair Powell reiterated that tight monetary policy would remain. The Atlanta Fed’s GDP model is forecasting the odds of a 0.75% rate hike in September at near 60%. August’s employment report will be released Friday and could have a big impact on both projections. The Dow finished down 4.2%, S&P down 4.02%, and Nasdaq down 4.43% for the week ending Friday.

Last Week

Last week, key indicators came out on inflation and GDP, but the markets looked right passed them. The only real headline was Fed Chairman Powell’s speech in Jackson Hole. Fed Chairman Powell confirmed in his 8-minute speech that the Fed will continue doing whatever it takes to push prices lower and keep them there. He talked about households having to endure “pain” as part of the effort to combat inflation. His speech likely is an inflection point for markets going forward. Did we really think the Federal Reserve was going to be dovish after improvement in only a few very minor inflation data points? The trading machines (algos) took over Friday while many were at the beach, leaving the overall market a bit illiquid.

Economists expected Powell to have a hawkish stance towards inflation. The Fed Chairman was more adamant and less forgiving than many thought he would be. Regarding raising interest rates, he said the Fed “will keep at it until we are confident the job is done.” And while rate increases would bring down inflation, “they will bring some pain to households and businesses…. the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.” Some experts interpreted the speech as a “no pivot.” This means that Powell is signaling rates won’t be lowered in 2023, as had been previously assumed. This tough stance is what sent markets lower and may well have an impact on stock prices this week too.

New Home Sales fell 13% in July to 511,000 (seasonally adjusted against June). This follows trends that showed similar slowdowns in Housing Starts, Building Permits, and Existing Home Sales. Yet the data is as expected, as a cooling housing market is a consequence of the Fed’s tightening monetary policy. Last week, Mortgage Rates ticked up to 5.55% from 5.13% for the average rate on a 30-year fixed-rate mortgage. Gas prices declined, and now average $3.88 per gallon.

Week Ahead – Fed Hint

September begins this week, and that means the August jobs report comes out on Friday. Wall Street sees Nonfarm Payrolls coming in at 300,000 for August. This level is strong and characteristic of a solid labor market. Economists see the Unemployment Rate sticking at 3.5% for August. That’s the same level as just prior to the pandemic. Chairman Powell referenced jobs in his Friday speech, saying “The labor market is particularly strong, but it is clearly out of balance, with demand for workers substantially exceeding the supply of available workers.” The one areas of concern is layoffs in the Fintech and online shopping sectors. But 300,000 new jobs still indicates an economy that remains on a growth track.

The S&P 500 posted the worst average monthly price change in September. Joining February as the only two months to record declines. Yet September stands alone as the only month in which the market fell more frequently than it rose. Year-to-date index performance; Dow down 11.16%, S&P down 14.87%, and Nasdaq down 22.39% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Erie CO Financial Advisor; investments, wealth management, retirement income planning; Boulder, Broomfield, Louisville, Niwot, Windsor, Berthoud CO

Back to School – Market Brief August 15, 2022

jim Financial advisor, Investment Management, Market Brief, Retirement Income Planning, Retirement Planning, wealth management August 15, 2022August 15, 2022financial advisor, investment management, market brief, retirement income planning, retirement planning, wealth management

With school around the corner, the S&P 500 has retraced more than half its decline since the highs in January. The S&P 500 is now down less than 10% YTD including dividends. U.S. equities rose for a fourth straight week. Boosted by positive inflation news. Last week all indexes finished up. The Dow up 2.99%, S&P 3.31%, and Nasdaq 3.10%.

Last Week

The S&P 500 Index posted the fourth straight week of gains. The index has gained 13.3% since the mid-year mark. A large contrast to the index’s -19.96% return for the first half of 2022. Due to inflation and Ukraine-Russia War, equities have been volatile and experienced challenges for most of 2022. However, last week brought positive news as the year-over-year CPI figure in July and PPI numbers both came in lower than expected. The figures were also lower than the previous month. Investors interpret this information believing that the chance the Federal Reserve might lower their future rate hike response in combating inflation. The release of preliminary August data by the University of Michigan Consumer Sentiment Index also gave stocks a boost. All sectors were in positive territory last week.

Week Ahead

Historically, August’s final weeks are slow as traders squeeze in their final vacations before the kids head back to school. Although the U.S. economic calendar is lighter compared to recent activity, there will be two important releases mid-week. Wednesday’s publication of the FOMC’s July meeting minutes will be reviewed closely as committee members have been publicly pushing back against the perceived dovishness from Chair Powell’s press conference. The retail sales report for July is expected to confirm that consumer spending is weakening as personal savings shrink and credit balances increase. Additionally, Walmart and Target will report earnings after both companies warned last month of decreasing margins and increasing inventories. Other events investors will keep an eye on include housing starts and existing home sales.

Year-to-date index performance; Dow down 7.09%, S&P down 10.2%, and Nasdaq down 16.6% through the close on Friday.

Financial Advisor Erie CO focus on investment and wealth management, retirement planning; Boulder, Louisville, Niwot, Lafayette, Windsor, Berthoud, CO

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Nowhere To Hide Inflation and Rates – Market Brief May 2, 2022

jim Uncategorized May 2, 2022May 2, 2022

Nowhere to hide as U.S. equities fell in volatile trading after disappointing tech earnings and a lower GDP report. The Nasdaq Composite Index fell 4% both Tuesday and Friday alone, falling 3.9% for the week. The Nasdaq 100 Index fell 13% in April, the biggest monthly drop since October 2008. U.S. stocks are hovering at the lows of the year, and investors receive little relief this week with the Fed meeting and important economic data set be released.

Last Week – Nowhere to Hide

The US economy shrank at a 1.4% annual rate in the first quarter, following six consecutive quarters of growth. It was the first contraction since the second quarter of 2020. Meanwhile, the Employment Cost Index, measuring wages and benefits, increased a record 1.4% in the first quarter dating back to 2001. The sharp increase added to fears of continued high inflation and expectations that the Fed will raise rates more aggressively at their summer meetings.

The S&P 500 Index posted a -3.26% return last week, falling for four straight weeks. The S&P index had recovered strongly in March after hitting its 2022 closing low. However, April told a story of decline as each week accelerated from bad to worse. Friday’s close marked a new low for 2022. The S&P index returned -8.72% in April, marking the worst month since March 2020. Volatility was evidenced last week as the index posted its second-best day of 2022 on Thursday, rising 2.48%. Then falling to the worst day of the year on Friday, -3.62%. Inflation, Fed monetary policy, future rate hikes, and war in Ukraine are causing concern for investors. All sectors were in negative territory last week, leaving investors nowhere to hide.

Week Ahead

The Fed meets on Tuesday and Wednesday this week and is widely expected to raise interest rates by 0.50%. This would be its largest rate hike since 2000. More big earnings and economic reports are coming this week, including the jobs report for April. More than 1,600 public companies report earnings this week. The range and number of companies will give data points on how different sectors are weathering the factors out there pressuring valuations, such as – the war in Ukraine, inflation, and interest rates.

Key economic data due to be released this week include the unemployment rate, construction spending, ISM Manufacturing, and factory orders. For nonfarm payrolls, economists expect a drop to 400,000 in April versus 431,000 for March. The expected unemployment rate for April is 3.6%. If the data comes in as such, they point to continued tightness in the U.S. labor force. ISM and factory orders give us insights into two consecutive months both with an optimistic look for the manufacturing sector. Year-to-date index performance; Dow down 9.25%, S&P down 13.31%, and Nasdaq up 21.16% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Erie CO Financial Advisor; investments, wealth management, retirement income planning; Boulder, Broomfield, Louisville, Niwot, Windsor, Berthoud CO

Corporate Earnings On Deck – Market Brief April 18, 2022

jim Financial advisor, Investing, Investment Management, Market Brief, retirement, Retirement Income Planning, Retirement Planning, wealth management April 18, 2022April 18, 2022financial advisor, Investing, market brief, retirement income planning, retirement planning, wealth management

Investors seek value as rising rates hurt growth stocks. U.S. equity performance was mixed in a shortened week as inflation and interest rates weighed on sentiment. Corporate earnings season accelerates, with Q1 reports due from companies in several key industry groups, including banks, trucking, airlines, metals, and technology. The Dow down 0.78%, S&P down 2.11%, and Nasdaq down 2.62%.

Last Week

The S&P 500 declined for a second straight week as the market offered little optimism to investors with climbing inflation and mixed Q2 earnings reports. Materials were the best performing sector in the S&P 500 during the week while Information Technology lagged. The yield on the ten-year treasury bill climbed to 2.83%, over 100 basis points higher than a year ago. This dampened growth stocks during the week. Oil spiked over $10/barrel over three days as peace talks between Russia and Ukraine stalled. Energy stocks beat the market last week. J.P. Morgan kicked off the 2Q22 corporate earnings season with quarterly profit that was 42% lower than a year ago.

In economic news last week, key data included Retail Sales, the Consumer Price Index (CPI) and University of Michigan Consumer Sentiment. Retail Sales rose 0.5% in March, slightly below the consensus forecast and down from the previous month. Sales at gas stations accounted for much of the increase, with an 8.9% rise from the prior month. Not surprising given the jump in oil prices. The Consumer Price Index rose 8.5%, its highest rate since 1981, up from 7.9% in February. The sharp increase reflected an 11% jump in energy prices. Some economists believe that recent high inflation may be the peak. However, the March data is far above the Fed’s long-term 2% target and moving in the wrong direction. University of Michigan Consumer Sentiment rose to a better-than-expected 65.7 in April, up from 59.4 in February.

Week Ahead – Corporate Earnings

The stock market opens today with corporate earnings season ramping up. Banks and financial companies will lead off, including Bank of America and American Express, as well as many regional banks. Other companies reporting this week include IBM, Halliburton, Lockheed Martin, Johnson & Johnson, Tesla, Alcoa, Procter & Gamble, AT&T, Verizon, Netflix, American Airlines, and United Airlines. The wide range of reporting companies will help give economists a sense of how different sectors are weathering inflation, rising interest rates, and the impact of the war in Ukraine and economic sanctions on Russia.

Key economic data due this week include Housing Starts, Existing Home Sales, and Leading Economic Indicators (LEI). For Housing Starts, economists expect March to be down from February. For Existing Home Sales, the consensus also calls for March to be down from a month earlier. While the housing market has been red-hot for many years, it has started to cool in recent months. Housing could face further pressure from aggressive Fed rate hikes. Economists see LEI coming in at 0.3% for March, in line with the February rate.

Year-to-date index performance; Dow down 5.2%, S&P down 7.8%, and Nasdaq down 14.7% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Erie CO Financial Advisor; investments, wealth management, retirement income planning; Boulder, Broomfield, Louisville, Niwot, Windsor, Berthoud CO