"Equities are a claim on uncertain future earnings." - Peter Bernstein
Last week's market recap:
- The S&P 500 closed the week up 1.56%. Year-to-date the index is down -14.29%.
- Large-Cap Value leads performance YTD at -4.55%
- NASDAQ closed the week up .73% and is down -27.70% YTD.
- Barclays Aggregate Bond index is down -12.78% YTD
- 10-Year Treasury Rate decreased, ending the week at 3.68% from 3.82% the prior week.
- Fed Funds Target rate is 4.00%
- The 1-Year Treasury is yielding 4.75%
- A 6 Month Treasury is yielding 4.69%
- What is your savings account rate?
The week ahead:
Better than expected inflation data has helped markets melt up over the past 6 weeks. Now the focus may shift to deteriorating growth and corporate earnings. Higher interest rates slow homebuilding, weigh on inventories, business investment, and exports. The economy should find some near term support from consumption, which accounts for roughly two-thirds of GDP. Disposable income is the key driver of consumer spending. For the last two years, disposable income has been boosted by fiscal stimulus and the surge in payrolls. With fiscal stimulus gone and payroll employment slowing, overall spending should decrease. This is good for the fight against inflation but bad for economic growth.
However, these headwinds should be partially offset by the Biden Administration’s decision to extend the student loan moratorium to June 30, 2023 if no resolution is reached on the loan forgiveness lawsuits. As well as, social security beneficiaries getting a 8.7% COLA increase in 2023.
Source: JP Morgan
As always, let us know if you have any questions.
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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