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Recap | Week Ahead | Selloffs Thumbnail

Recap | Week Ahead | Selloffs

"Don’t let the noise of others’ opinions drown out your own inner voice.” – Steve Jobs

Last week's market recap: 

  • The S&P 500 closed the week down -.27%.  Year-to-date the index is up 17.43%
  • NASDAQ closed the week down -1.87%.  YTD the index is up 31.04%
  • U.S. Aggregate Bond index was down -.64% for the week.  YTD the index is up .64%
  • 10-Year Treasury Rate increased, ending the week at 4.16% up from 4.05% the prior week
    • Fed Funds Target rate is currently 5.25-5.50%
  • The 1-Year Treasury is yielding 5.37%  
  • A 6 Month Treasury is yielding 5.50%  


The week ahead:  

  • Housing Starts
  • Retail Sales
  • Earnings Week – Home Depot, Target, Walmart, Palo Alto Networks, etc.


Can a stock market selloff be healthy?

Minor selloffs are normal. We’ve seen a small selloff in most major indexes so far in August, but for now it looks healthy. The top 7 mega-cap tech stocks are down almost 5.5% since 8/1/23 vs the Dow Jones Industrial Average down a little over 1% during the same time period. We’re seeing a broadening of the market, but the mega-cap tech stocks valuations are still a bit stretched.  

Are higher stock valuations justified?


Maybe. Large, healthy companies loaded up on long term debt at low rates.  Inflation is slowing, and most prices aren’t going back to 2020 levels. Inflation can be bad from a valuation perspective, but it can be good from an earnings perspective. Earnings are simply dollars. They are nominal. Higher inflation is good for earnings! If we are going to meet earnings estimates for 2024, we probably need inflation to stay elevated. So an argument for higher valuations could be justified. 

Again, intra-year declines are normal. The average and median intra-year pullback is roughly 8% (we had an 8% pullback earlier the year). Healthy selloffs remove some optimistic sentiment without damaging the overall trend. Pullbacks create long term opportunities!

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® 

Phillip Tompkins 

* https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/    

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