Presented by The PensionmarkMeridien Team, May 23, 2023
THE WEEK ON WALL STREET
Major U.S. stock markets closed higher last week, with technology leading. In fact, large-cap tech helped to power the S&P 500 to its highest weekly close since August 1 of last year.
Tallying last week, the S&P 500 rose by 1.65%2, the Nasdaq 100 increased by 3.47%3, and the Dow Jones Industrial Average added 0.38%4.
CALM INDEXES WITH A SPLASH OF UPSIDE
Despite uncertainty over the debt ceiling5, major averages have remained calm, with volatility, as measured by the VIX, remaining subdued following the spike in March on regional bank concerns.
The recent market calmness has many folks scratching their heads, wondering why the debt ceiling and looming credit crunch risks6 aren’t currently impacting the financial markets.
But hey, the markets are usually ahead of the headlines. As long-term investors, we let the narratives play out and use time to our advantage. Perhaps the tightening credit markets are doing the Federal Reserve’s job for them at a high level, as mentioned7 by Federal Reserve Chair Jerome Powell.
GROWTH OUTPERFORMING VALUE
Growth stocks8 have been outperforming their dividend-paying value counterparts lately. The trend of defensiveness that dominated throughout 2022 has taken a backseat to growth and technology thus far in 2023.
Ultimately, as evidenced above, trends come and go. That’s one reason that it is wise to have a well-balanced portfolio with an array of asset classes.
APRIL RETAIL SALES
On Tuesday, the Commerce Department released April Retail Sales data9, which showed a 0.4% increase. This is good news, as it’s the first rise after two months of declines. However, it’s still less than what analysts were predicting.
U.S. stock indexes seemed to like the data, albeit in a delayed fashion. The S&P 500 traded lower last Tuesday after the data release but moved higher over the following two trading sessions. It may seem like a confusing data point (given that we are experiencing credit tightening). But the market knows best!
Some news reports seemed to interpret the data as a strong consumer, while others showed more of a consumer that is struggling to keep up with inflation. Consumer debt continues to rise10.
GOVERNMENT BOND YIELDS FIRM
Treasury yields rose in line with equities last week, indicating investors flocked to equities and sold bonds.
Perhaps not too surprising, as all eyes are peeled on the debt ceiling, the U.S. 10-year note yield settled last week near 3.693%11 at levels not seen since March.
Dallas Federal Reserve President Lorie Logan said12 the current economic conditions do not yet warrant a rate hike pause. Stocks didn’t seem to mind.
THIS WEEK
With this Wednesday’s meeting minutes release from the last Federal Open Market Committee (FOMC) meeting, all eyes are trained on whether commentary indicates that the Fed will pause rate hikes at the June meeting or make it eleven rate hikes in a row.
In addition, Friday will feature the Fed’s preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index. The resulting data could influence the Fed’s stance on inflation at the upcoming June 14th meeting.
A REMINDER
Sometimes the news flow doesn’t make sense or seem to match the trading behavior of the markets. The “mood of the market” is dynamic and changes, sometimes quickly and sometimes slowly. Being long-term investors keeps us invested and disciplined.
The PensionmarkMeridien Team may be reached at 866-871-9963 or meridienteam@pensionmark.com
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Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).
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This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
CITATIONS:
- Trading View, May 21, 2023
- Trading View, May 21, 2023
- Trading View, May 21, 2023
- Trading View, May 21, 2023
- Yahoo Finance, May 20, 2023
- CNBC, April 20, 2023
- The Hill, May,19 2023
- Investors Business Daily, May 17, 2023l
- Census.gov, May16, 2023
- CNBC, May 15, 2023
- Trading View, May 21, 2023
- CNBC, May 18, 2023
Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).