Back to School – Market Brief August 15, 2022

Back to School – Market Brief August 15, 2022

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.

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.

Nowhere To Hide Inflation and Rates – Market Brief May 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.

Nowhere

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

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.

Corporate Earnings On Deck – Market Brief April 18, 2022

Corporate Earnings On Deck – Market Brief April 18, 2022

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

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.

Conflict Overseas – Market Brief March 28, 2022

Conflict Overseas – Market Brief March 28, 2022

Stocks recorded their first back-to-back weekly gains since late January / early February. U.S. equities rose modestly, as strong economic data was checked by geopolitical tensions. Investors’ attention will be focused this week on inflation and jobs data. The Fed is betting on a soft landing for the economy, but the outcome is far from certain.

Last Week – Conflict Overseas Reaches 2nd Month

Last week, the Dow Jones Industrial average was up 0.3%. The S&P 500 was up 1.8%, and the Nasdaq Composite rose 2%. Year-to-date, the numbers are still negative. In housing news, the average 30-year fixed mortgage rate reached a 3-year high of 4.5%. This is boxing out some buyers as new and pending home sales fell in February. Inventory remains limited, keeping asking prices high.

Nonfarm payrolls are expecting to be 450,000 for March, a drop from the 678,000 in February. The unemployment rate is expecting to be 3.7% for February. A slight tightening from the 3.8% the month prior. The consensus sees a slight rise in personal income to 0.5% for February. Personal spending is expecting to show a sharp slowdown at 0.6% in February, versus 2.1% in January. This goes along with inflationary pressures that consumers are feeling, especially elevated gas prices at the pumps.

Federal Reserve Chairman Jerome Powell stated the Federal Reserve will be more aggressive with monetary policy. Key economic data out last week included: New home sales, durable goods orders, and UMich Consumer Sentiment. One significant weekly data point was initial jobless claims which posted at 187,000 for the week ending March 19, its lowest number in 50 years, and a sharp decline versus the week prior of 215,000.

New home sales came in at 772,000 SAAR for February versus a consensus of 825,000 and compared to a revised 788,000 SAAR in January. The final UMich Consumer Sentiment number posted at 59.4 for March, slightly lower than the 59.7 expected. Consumer sentiment of course has pressure from volatile oil prices and the conflict in Ukraine.

The Week Ahead

Key economic data releasing this week include nonfarm payrolls, the unemployment rate, personal income and spending, and Real GDP. In this time of inflation and geopolitical uncertainty, all of this data matters. The Federal Reserve is carefully considering each data point to help decipher the health of the overall economy. The labor market remained strong, with initial jobless claims falling to the lowest level since September 1969.

As the war in Ukraine enters its second month, and with negotiations seemingly at a stalemate, investors’ attention will focus on inflation and jobs data. The Fed is betting on a soft landing for the economy, but the outcome is far from certain. The labor market is tight. The Fed’s preferred inflation measurement, the Core PCE Price Index, is the main event on Thursday, while ISM Manufacturing PMI joins a busy end of the week.

In Europe, Germany will publish preliminary CPI for March along with monthly retail sales and consumer confidence. These numbers have turned pessimistic given the Russia-Ukraine conflict. Year-to-date index performance; Dow down 4.06%, S&P down 4.68%, and Nasdaq down 9.43% 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

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.

Energy Prices on the Rise – Market Brief March 14, 2022

U.S. equities attempted to rally at the end of last week as Russian President Putin claimed some progress in talks with Ukraine. Indexes finished near the lows, extending the 2022 losing streak. Months of anticipation will reveal in the Fed’s interest rate decision this week, the beginning of rate hikes. Surging energy prices and inflation is largely attributable to supply-side challenges, yet the Fed believes the current policy is too loose. The S&P 500 and Nasdaq Composite indexes fell more than 3% last week.

Last Week – Energy Prices

The stock market losing streak continued. The DJIA was down 1.99%, while the S&P 500 was off 2.88%, and the Nasdaq Composite declined 3.53% for the week. On Tuesday, the NFIB small business optimism index for February slipped to 95.7. Lower than January’s reading of 97.1. Small business owners are feeling the impacts of wage inflation and rising fuel costs. On Wednesday, weekly mortgage applications rose 8.5% overall. Both originations and refinancing’s were up in high single digits among rising rates.

energy prices

Weekly initial unemployment claims moved higher on Thursday, to 227,000 from the pandemic low of 216,000 the prior week. The big inflation data last week was the February consumer price index (CPI) report. The all-items CPI rose 7.9% annually, the highest in 40 years. Energy prices soared as the war in Europe continues. The core index, which excludes food and fuel, rose 0.5% monthly and 6.4% annually. The Russian invasion dismissed belief of cooling inflation. The War in Europe has spiked petroleum prices around the world. Wrapping the data week on Friday, University of Michigan consumer sentiment for March slipped below 60 to 59.7. Consumer sentiment reached 10-year lows. On top of inflation concerns, the war in Europe is adding to general geopolitical anxiety.

Week Ahead

The markets may need the Luck of the Irish on Thursday to snap the losing streak. The February Producer Price Index estimates to rise 1.0% month-over-month and 10% annually. The core PPI estimate to rise 0.6% monthly and 8.3% annually. Wednesday retail sales report, expected to rise 0.5% for February after the surprising 3.8% gain for January. Inflation is causing consumers to spend more for less and potentially cutting into savings. Most experts agree the Fed’s hiking path is likely to be slower than previously expected considering the war in Europe. The current reports believe a 0.25% rise in interest rates on Wednesday.

The NAHB housing market index estimate for March is the low 80s, in line with February’s 82. On Thursday, February housing starts are forecast at a 1.700 million SAAR (seasonally adjusted). This would be an improvement from the 1.638 million SAAR for January. Capacity utilization is forecast to edge higher to 77.8% from 77.6% for January. Factories continue to run all-out to address the supply-chain crisis. On Friday, existing home sales report estimated to come in at a 6.17 million SAAR for February. This would be a decline from a 6.50 million SAAR for January.

Year-to-date index performance; Dow down 9.3%, S&P down 11.8%, and Nasdaq down 17.9% 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.