Market Recap and the Week Ahead | Market Uncertainty

It’s not whether you get knocked down. It’s whether you get back up. - Vince Lombardi

Last week's market recap:

The S&P 500 was down -3.23 for the week. Year-to-date the index is down -16.78%.

Large-Cap Value leads performance YTD at -10.37%

NASDAQ closed the week down -4.18% and is down -25.24% YTD.
10-Year Treasury Rate increased, ending the week at 3.19% from 3.04% the prior week.

Fed Funds Target rate is 2.50%

The 1-Year Treasury is yielding 3.52%
A 6 Month Treasury is yielding 3.41%

What is your savings account rate? If it didn’t increase recently, you may want to find a new savings account.

The week ahead:

Wednesday: Release of the Fed’s Beige Book (a report published by the Fed providing information on current economic conditions)
Thursday: Jerome Powell will deliver remarks at a conference (Cato Institute).
European Central Bank meeting. They’re expected to raise interest rates.
Apple’s product launch event

Quick Comments:

Markets are now pricing in a 70% likelihood of a 75-bps hike in September, followed by a 50-bps hike in November and a 25-bps hike in December, bringing the year-end Fed funds rate range to 3.75-4.00%. Expectations for rate cuts in 2023 were pushed back, as markets brace for a higher rates for longer environment. Most investors are expecting volatility to remain elevated.

Source: FactSet

Markets like certainty. There is a lot of uncertainty in the market right now… European energy crisis, China zero COVID policy, Russia/Ukraine war, recession speak, inflation data, Midterm elections, etc. The only real certainty is that global central banks are focused on fighting inflation via raising rates. Next week’s CPI data on 9/13, and the Fed meeting on 9/20-9/21 may be the two most important market movers in September. Slower economic growth implies lower rates.

On a positive note… The U.S. has the ability to be energy independent. We have a strong educated consumer. Our economy values science and innovation, which is a huge deflationary force. We have friendly neighbors to the North and South, and two oceans on our borders. Mid-Term elections are coming up in November. Historically, markets like getting past the uncertainty of the mid-terms.

To discuss in more detail, feel free to reach out to us.

Best,

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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