This past week saw the inflation rate increasing at the slowest pace since March 2021. Consumer Sentiment, as measured at the University of Michigan, hit the highest level in two years. Wall Street was expecting this number to show up at 65.5 but it actually came in at 72.6. Strong earnings from JP Morgan, Wells Fargo and Delta Airlines pushed the market higher as well. Although the two banking giants posted these great earnings, the financial industries didn’t fare as well. Still, the markets have been reacting in a most positive way since the S&P 500 crossed the magic threshold of 4,300 a few weeks ago.
There have been very positive signs taken from the earnings reports now being submitted. The S&P 500 was up 2.52% for the week, closing Friday at 4,505. The NASDAQ closed the week at 14,113 up 3.32% and Friday the DJIA ended at 34,509 up 2.29% for the week. The Small Cap market, measured by the Russell 2000 saw a decrease for the week of 1.02%.
As we mentioned above, inflation is now standing at 3% for the month of June and compared to May which it stood at 4% it is now at the lowest level since October 2021. We know that the Fed’s goal has been a 2% inflation rate and now that we are nearing that number, we may only see one more increase in interest rates. We believe that the July increase is set in stone, however this “could” be the last one in 2023. We’ll see.
30-year fixed mortgages are 7.07% nationally which sets it at the highest level since November.
The tight labor market continues to give the Federal Reserve headaches. Unemployment claims fell to 237,000 for the week ending July 8th, but the street expected that number to be 12,000 points higher at 250,000. Remember what we’ve pointed out where good news is bad news. This is probably the biggest reason the Feds may increase rates this month.
We are still troubled by the yields coming out of the U.S. Treasury. We continue to see the yield curve inverted and this is usually a significant warning of a coming recession. The rate on a 2-year Treasury currently stands at 4.77%. 5-year 4.05% and 10-year at 3.83%. This bears watching. Very closely.
In closing, this week’s rally was based on the good economic news presented as well as declining inflation. We will continue to monitor all of this for our subscribers.
Our positions currently:
It is important to note that the following positions have been in place for weeks. Although we are not advocating transfers currently, it may NOT be in your best interest (should you be a new subscriber) to jump into these sectors at the present time due to price increases already realized. We suggest following our weekly market updates and Mid-Week Alerts for any new suggestions and move into (or transfer out of) an investment at that time.
- S&P 500 loaded mutual fund or S&P 500 ETF
- A portfolio consisting of Financial Services.
- a portfolio consisting of Leisure goods and/or services.
- a portfolio consisting of Telecommunications.
- NEW – a Small Cap - loaded fund.
Please watch for our Mid-week Market Alerts should there be any.
* As is the case with any investment, use your discretion and judgement before purchasing and/or transferring. Diversification is always prudent; therefore, our suggestion is using a portion of your portfolio and not the total in any one fund or subaccount. A portion should remain in Cash (Money Markets)