retirement income planning

Inflation Still Running Hot – Market Brief Sept 19, 2022

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inflation

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%.

inflation
Inflation

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.

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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 , , , , ,

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.

Fed Hint

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

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.

Back to School – Market Brief August 15, 2022

jim Financial advisor, Investment Management, Market Brief, Retirement Income Planning, Retirement Planning, wealth management , , , , ,
school

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.

Corporate Earnings On Deck – Market Brief April 18, 2022

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corporate earnings

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

jim Financial advisor, Investment Management, Market Brief, Retirement Income Planning, Retirement Planning, wealth management , , , , ,
conflict

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.