Every week we'll provide updates on the latest trends in the stock market. Follow along to stay up to date!
Major U.S. stock indexes fell last week–marking the seventh consecutive down week–while U.S. government bond prices rose. Tallying the week, the S&P 500 decreased by 3.05%, the Nasdaq 100 fell by 4.45%, and the Dow Jones Industrial Average declined by 2.90%.
Bear Market: S&P 500 Tests 20% Pullback
The broadest measure of the U.S. economy, the S&P 500 Index,traded down last Friday to 80% of its all-time high, reached on January 3rd of this year.
A 20% decline from highs traditionally marks official bear market territory. However, buyers emerged near this level on Friday, and the market displayed an impressive rally from its lows and finished last Friday on a positive note.
Friday’s late-afternoon intraday rally in the S&P 500 wasn’t enough to save the entire week, though; the S&P 500 has now declined for seven straight weeks, the longest weekly streak since 2001.
Bond Prices Shoot Higher, Yields Fall
U.S. government bonds were in high demand last week as some investors continued to pile into fixed income products, locking in 10-year note yields between 2.77% and 3.00%.
This demand for 10-year notes pushed yields lower over the course of the week, settling at 2.788%--down from 2.934%, where they settled the previous week.
This week, the investment community will be watching for clues as Federal Reserve Chair Jerome Powell is due to speak at an economic summit in Las Vegas on Tuesday. In addition, on Wednesday, the most recent Federal Open Market Committee (FOMC) meeting minutes will be released. Market participants will be paying careful attention to what the minutes further reveal about the Fed's strategy in regard to inflation.
Cloudy U.S. Retail Sales
Retail sales data released last week showed that sales rose 0.9% in April, below the estimate of 1%. The 0.9% rise marks four months in a row of higher consumer spending. However, the data does not adjust for inflation, so it’s hard to get an exact read these days on consumer sentiment via retail sales data.
Aside from the April data release, it’s worth noting that many major U.S. retailers, including Target, Lowe’s, Home Depot, and Walmart, have posted lackluster profit numbers this earnings season, citing inflation as the culprit.
It looks like monkeypox could be heavily featured in the news this week, as cases have turned up in Europe and the United States. This story is in the early stages, and we will be staying tuned to the latest developments and monitoring any financial or economic impacts.
The overall market sentiment couldn’t be any more bearish lately, as the S&P 500 dances with correction territory. Bond yields are in focus, and investors flocking to buy bonds over the last couple of weeks have been pushing yields slightly lower, even in the face of projected future interest rate hikes. As we continue to deal with significant market volatility, I do want to take this opportunity to highlight that week-to-week or day-to-day developments shouldn’t cause overwhelming concern. The ability to hold through market cycles is an essential aspect of long-term investing. With that said, we are, of course, monitoring the market to determine any necessary adjustments. If you have any questions about your strategy or if I can otherwise be of service to you, please feel free to contact me. We are always here when you need me.