ClientFirst Financial Strategies
Financial Planning and Portfolio Management
As is the case in much of life, there is good news, and there is bad news. On the positive front, the debt ceiling deal, employment data, and inflation data supported the markets this week. But we’re still far from the Fed’s 2% inflation target, which may lead to some policy action. The market impact is to be determined.
This past week’s results were not mixed as they have been lately. All three major US stock market indices posted positive returns this week albeit with narrow breadth concentrated in five big tech names: Apple, Microsoft, Alphabet/Google, Nvidia, and Amazon.
The S&P 500 has moved less than +/- 1% for six straight weeks! Concerns abound; in no particular order, they include the debt ceiling, persistent inflation, banking woes, and recession fears. We’ll leave it to you to decide which causes the most angst!
Carly Simon’s song, “Anticipation,” is a great metaphor for what occurred this week with the Fed’s announcement of a 0.25% increase in interest rates and the subsequent market reaction.
Slowly, oh so slowly, the three major US stock market indices keep marching upwards. Since the January breakout rally, the US indices have trended sideways for the most part.
It truly is like watching paint dry! All three major US stock market indices were down negligibly for the week. In fact, the broad market S&P 500 hasn’t produced much of a return since the January 2023 resurgence—needless to mention, the past two years.
We eked out another week of broad-based positive US index returns . For some reason, US stocks continue to rise in the face of persistent inflation, albeit at a slower pace. It appears that the market is hanging its hat on the hope that the Federal Reserve will start to lower interest rates near the end of 2023.
1Q2023 ended with a bang as the major US stock market indices were up across the board. Lately, much of the US stock market is focusing on the Federal Reserve and Chairman Powell’s next policy meeting occurring May 2-3. While this is unquestionably important, there are many other things that matter when determining the market’s ultimate path.
If Meghan Trainor were a financier, she may consider reprising her 2014 hit song as “all about those banks!” Yet all three of the major US stock market indices shrugged off the woes of Silicon Valley Bank, First Republic, Signature and Credit Suisse to post gains this week.
You never would have guessed that two of the three major US stock market indices would post gains this past week with what occurred in Silicon Valley Bank, Signature Bank, and the broader banking sector! Mega-cap tech names like Microsoft, Apple, and Google led the charge as a flight to safety trade.