WHERE WE WERE
July saw the market rally as we observed the S&P 500 index soar +9.1%, signaling the greatest monthly gain since November 2020. This comes despite worrisome reports surrounding inflation and GDP growth which saw rates of 9.1% and -0.9% respectively. With the latter report being the second straight quarter of negative returns, many economists have acknowledged that we are now facing a technical recession, though this measure is often dismissed as archaic as market dynamics shift and job reports continue to beat expectations.
Broad-based hiring led the way for positive investor sentiment as we saw employers add 372,000 jobs in June, keeping in line with months prior. Unemployment remained unchanged as it was reported at 3.6% for the second straight month, just slightly higher than the 50-year low recorded in September 2019 (3.5%).
In conjunction with the broader equity markets, bonds also rallied in July as risk-on sentiment shifted the 10-year benchmark from its previous highs of 3.5% in June and returned to levels not seen since April, closing the month out at 2.65%.
WHERE WE ARE GOING
It will be several weeks before market participants know if they were overly optimistic or spot-on with their interpretation of Fed Chair Jerome Powell’s comments following the latest FOMC meeting. In the meantime, an earnings season that’s shaping up to be better than expected is also helping to give investors some optimism that, at the very least, the worst of the market’s sell-off is over.
Another key economic report due this month is the consumer price index (CPI), scheduled for release on Aug. 10. Given that inflation is the most important topic in financial markets, the CPI report will be watched closely.
ADDITIONAL THOUGHTS
Although the first half of the year and the bear market caused many to fear the worst for their accounts, we remained certain that the markets would find a way to bounce back as they have after every previous bear market. We may not be back to the levels we reached at the end of 2021 just yet, but we want to continue to encourage everyone that we are in familiar territory, and our team’s experience should help you feel at ease in a time such as this. As we have said before, our goal is to help remove your emotions from the investment process so that you can stay the course and continue toward your goals. We mentioned at the end of our June Market Outlook that it may be a period in which some great bargains can be found in the market, and subsequently, the S&P 500 has gained 13.6% since mid-June. Despite this extraordinary recent gain, the old adage, “it’s not about timing the market, but about time in the market,” remains true. Rather than overthinking the volatility of the current market, it may be wise to consider if it is time to be more invested. If you are still unsure about the ways in which the current volatile economic conditions may affect your personal portfolio or plan, please reach out to us and we can discuss ways to address your concerns and ensure your long-term goals remain intact.
Resources:
https://www.nytimes.com/2022/07/08/business/economy/jobs-report-june-2022.html
https://www.thebalance.com/unemployment-rate-by-year-3305506
https://www.forbes.com/advisor/investing/stock-market-outlook-and-forecast/
Disclaimer:
BNY Mellon | Pershing is our clearing and custody provider. Olistico Wealth, LLC, a registered investment adviser. Pershing and Olistico Wealth, LLC are separate, unaffiliated companies, not responsible for each other’s services or policies. Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. Past performance is no guarantee of future results.