Recap | Week Ahead | Bad News is Bad
Markets peak when they sell-off on good news.” – Wall Street Adage
Last week's market recap:
- The S&P 500 closed the week down -.35%. Year-to-date the index is up 5.15%
- NASDAQ closed the week down -1.31%. YTD the index is up 5.18%
- U.S. Aggregate Bond index was down -.55%. YTD the index is down -2.01%
- 10-Year Treasury Rate increased, ending the week at 4.30% up from 4.17% the prior week
- Fed Funds Target rate remains at 5.25-5.50%
- The 1-Year Treasury is yielding 4.94%
- A 6 Month Treasury is yielding 5.33%
- Short term rates are trending lower. Reinvestment Risk for short term debt remains elevated.
The week ahead:
- Flash PMIs
- Earnings: Nvidia, Walmart, Home Depot, Palo Alto Networks, etc.
- The Fed will release minutes from its latest policy meeting in January
Bad News is Bad:
Last week, equity markets had a sharp decline on Tuesday after the January CPI report was hotter than expected. This inflation reading also pushed out expectations for the Fed’s interest rate cuts into June/July.
Some may view this as inflation is sticky and the economy is deteriorating.
Others will say, this is a sign of a normal market. Stocks are supposed to sell-off on bad news.
- After the last few years of living through a “good news is bad” and “bad news is good” market environment. We’d welcome a return to normalcy.
If the longer term outlook is easing inflation and lower interest rates, volatility provides opportunities to add, diversify, and rebalance portfolios.
As always, let us know if you have any questions.
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®
Phillip Tompkins, CFP®
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