ClientFirst Financial Strategies
Financial Planning and Portfolio Management
We now have two straight weeks of negative returns in the major US stock market indices, and it was a doozy, especially on Friday! Federal Reserve Chairman Jerome Powell made perfectly clear his intention to beat inflation. In no uncertain terms, that means raising interest rates higher for longer to slow down economic growth.
Sooner or later, after four weeks of gains in the S&P 500, we experienced negative returns in all three of the major US stock market indices. It appears that rising interest rates (and bond yields) may push down stocks.
All three of the major US stock indices posted gains for the week with the S&P 500 having advanced four weeks in a row! Even the year-to-date returns, though still off, have recovered about 20-50% from the June lows.
How does the song go? “Two Out of Three Ain’t Bad!” That’s what happened last week as the major US stock market indices posted gains in the S&P 500 and Nasdaq but a slight loss in the DJIA.
Last week produced winners in the US stock market as all three major indices enjoyed gains. In fact, July posted the best month since 2020!
Have you ever had one of those weeks when things didn’t seem to go very well but, on the whole, they actually did? Maybe the summer malaise has set in cause that’s what happened to the US stock market indices with all three posting gains.
There is an age-old adage that Dr. Marty Zweig coined. Whether interest rates are going up or down, “don’t fight the Fed”! For the past 40 years, interest rates primarily went down and stayed there. Recently, as we all know, interest rates have begun to rise.
The US stock market indices must have had a nice 4th of July cause all three posted gains for the four-day trading week.
Finally, after enduring downdrafts the past 10-11 weeks, we experienced positive returns from all three major US stock market indices. Although it may be an aberration in a bear stock market, it still feels good.
Both the S&P 500 and Nasdaq have suffered losses 10 of the past 11 weeks while the DJIA has now been down 11 of past 12 weeks. Last week was the worst carnage since March 2020.