Presented by The PensionmarkMeridien Team, July 26, 2023
THE WEEK ON WALL STREET
Major U.S. stock market indexes traded in a mixed fashion last week–with sector rotation on display. A big week full of corporate earnings and the Fed is now on deck.
Tallying last week, the S&P 500 was higher by 0.69% 1, the Nasdaq 100 was lower by 0.90%2, and the Dow Jones Industrial Average was higher by 2.08%3.
DOW JONES INDUSTRIALS LEAD THE WAY
When was the last time you heard that one? Well, last week (perhaps courtesy of some mega cap tech earnings and guidance that underwhelmed investors), we saw the old-school Dow 30 leading the way, indicating sector rotation and potential further broadening of the recent stock market rally.
The Dow has seen ten consecutive4 positive trading sessions–its longest rally since 2017. Who doesn’t love a solid dividend-paying industrial stock? Diversification is key.
FED MEETING EXPECTATIONS
Even as inflation has been cooling5, the Fed remains in the spotlight as the July meeting approaches on July 26th.
Expectations as of last Friday’s market close have virtually cemented the likelihood of a 25 basis point hike this week. Weekly closing data showed a 99.2% probability of such an occurrence, according to the CME FedWatch Tool6.
Looking beyond the July meeting, what will Chair Powell broadcast about the next Fed meeting (September)? The CME FedWatch Tool shows a probability of 83.5% that the Fed will leave rates unchanged in September–as of the time of writing.
JACKSON HOLE SYMPOSIUM
While there is no Fed meeting in August, there will be the annual Jackson Hole Symposium7–which is known for monetary policy moves and plans.
The title theme of this year’s gathering of global monetary policy leaders is “Structural Shifts in the Global Economy,” and will take place Aug. 24-26.
ECONOMIC DATA INCOMING
Consumer Confidence, Advance GDP, Unemployment Claims, and the Core PCE Price Index are all on the calendar. We know the Fed will be paying attention to their favorite inflation indicator in Core PCE on Friday, even though it comes after the rate decision on Wednesday.
Are you craving more economic data like me? Here8 is a solid great write-up on this week’s economic data releases.
THE TAKEAWAY
Consider the market environment a year ago compared to now. All anyone wanted to consider was the Fed a year ago–and how big rate hikes would be. It’s now a different story, with more emphasis on corporate earnings and guidance along with sector rotation. It is a healthier investment environment overall.
Market narratives are dynamic, and we are now seeing a more healthy narrative with an earnings-driven stock market combined with a Fed-driven one.
The July 26th Fed meeting has market expectations of producing a 25 basis point hike, according to the CME FedWatch Tool9. Market watchers will pay attention to the statement and subsequent press conference for clues regarding the Fed’s outlook for the remainder of 2023.
It is sure to be an eventful week.
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:
1. Trading View, July 22, 2023
2. Trading View, July 22, 2023
3. Trading View, July 16, 2023
4. CNBC, July 21, 2023
5. CNBC, July 12, 2023
6. CNBC, July 13, 2023
7. Federal Serve Bank of Kansas City
8. Econoday, July 21, 2023
9. CME Group, July, 2022
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).