“Invest for the long haul. Don't get too greedy and don't get too scared." M.C. Davis
Last week's market recap:
- The S&P 500 was down -1.16% for the week. Year-to-date the index is down -10.39%.
- Large-Cap Value leads performance YTD at -4.80%
- NASDAQ closed the week down -2.48% and is down -18.37% YTD.
- 10-Year Treasury Rate increased, ending the week at 2.98% from 2.84% the prior week.
- The 1-Year Treasury is yielding 3.30%
- Fed Funds Target rate is 2.50%
The week ahead, 8/22:
- PCE (Personal Consumption Expenditures), The Fed’s main measure on inflation
- Corporate Earnings Season continues
- Friday: Federal Reserve’s Jackson Hole Symposium
This week, investors will be focused on the Fed’s meeting in Jackson Hole, Wyoming. The market has been hot since the mid-June lows, maybe too hot. Since then, the S&P 500 has bounced 15% and almost 8% since the last fed meeting in late July. The gains are mainly due to expectations that we’re at peak inflation, and a potentially more dovish fed.
However, the recent gains may be giving the Fed more ammunition to remain hawkish and continue raising rates to fight inflation. This may pressure stocks in the short term, but that’s ok as long as nothing is said that spooks the markets. U.S. inflation is still too high, and monetary policy needs to continue to tighten. A rate hike is expected in September, and the Fed probably won’t be declaring victory on inflation anytime soon. Shelter inflation was up .5% in July. We may need to see a cooling of Shelter inflation before we see the “Dovish Fed Pivot.”
Below is a chart from J.P. Morgan:
To discuss in more detail, feel free to reach out to us.
CRA Investment Committee
Matt Reynolds CPA, CFP®
Tom Reynolds, CPA
Robert T. Martin, CFA, CFP®
Gordon Shearer Jr., CFP®
Jeff Hilliard, CFP®, CRPC®
Joe McCaffrey, CFP®
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