Consumer Sentiment Crash It was no surprise to anyone watching the news over the last month that the University of Michigan Consumer Sentiment Index for May nosedived back to the lowest levels in eight-years, and approached the nadir reached in the financial crisis and in the early 1980s. U.S consumers and investors are clearly confronting troubled waters as the stiff winds of the pandemic, the war, and inflation continue to blow [...]
Dark Clouds Descend The stock market’s losing streak continued into May, as the Dow Jones Average lost 0.2%, its sixth straight declining week, while the S&P 500 also fell 0.2%. Once again, the losses were heavier in the Nasdaq Composite and the Russell 2000, which slid 1.5% and 1.3%, respectively. Both of those indexes are nearly 25% below their record highs from last November, and down double-digits over the last 12-months. [...]
FAANG in Flux For the second week in a row, the market was slightly ahead through the Thursday afternoon coffee break only to nosedive into the weekend. By the closing bell on Friday, the S&P 500 had shed 3.27%, the Nasdaq was down 3.93%, and the Russell 2000 lost a discouraging 3.95%. The market had a “bad news is good news” rally on Thursday following a surprising report that first quarter [...]
Technical Turnaround All was quiet on the Wall Street front until mid-morning Thursday when suddenly a nasty selling assault was unleashed in all the equity markets. The S&P 500 decline from Thursday’s high to Friday’s close was a brutal 4.7%, resulting in a loss of 3.1% for the week. There was no place to hide as the Nasdaq sank -3.83%, the Russell 2000 -2.49%, with the DJIA faring the best with [...]
During the period, the Dow Jones Industrial Average returned -4.57%, the S&P 500 returned -4.95%, the Russell 2000 returned -7.80% and the Nasdaq 100 returned -9.08%. The U.S. 10Y Treasury Yield ended the quarter at 2.338%. For the first time in two years, the pandemic was not the primary factor impacting the markets: in March, the Federal Reserve raised interest rates (the first increase since late 2018) in an effort to combat [...]
A Million Reasons In her 2016 hit ‘Million Reasons,’ Lady Gaga sings: “I've got a hundred million reasons to walk away But, baby, I just need one good one to stay.” That one line captures how easy it is to find recent data points that support pessimism, and yet historical long-term equity market returns remain an excellent counterpoint to the recent negative sentiment among equity market participants. This past week offered [...]
The $9 Trillion Question The $9 trillion question (size of the Fed’s balance sheet) which is unnerving the financial markets is whether “normal” monetary policy can be restored without crashing the economy. We have recently and frequently heard the argument that since the strength in the markets and the economy was built on the ultra-accommodative Fed policies, that it therefore follows that the significant hawkish turn in tone will undoubtedly lead [...]
Inversion Diversion Some market prognosticators believe that the stock market climbs any "wall of worry." If that is true, then the stock market is going much, much higher. Ironically, despite all the supply-chain issues globally, so far in 2022 there have been no shortage of bricks for the metaphorical "wall of worry." The U.S. yield curve extended its recent flattening after another strong employment report on Friday increased the probability that [...]
Small-Caps Are Finding Their Footing The bounce back rally continued for a second week, with mega caps back in favor as the S&P 500 advanced +1.8%, and the Nasdaq gained nearly +2%. Small-caps continued to lag the field, with the Russell 2000 slipping -0.4%. On Friday afternoon I discussed our view of the state of small-caps on Yahoo! Finance. On their news feed, the teaser quote they used is, “Small-cap stocks [...]
Outbreaks and New Rates In our previous commentary, “War-Torn Week”, we adapted the blues song “Stormy Monday” to describe the tone of the market. We expressed our belief that in the upcoming week that the war would be the primary determinant of the direction of trading, with the FOMC meeting, PPI report, and all things China also having significant influence. On Monday, the global equity markets extended their losses, as an [...]