Welcome to June!
What a relief to have May in the rearview mirror after a volatile month (in both the markets and the headlines). Surprisingly, despite weeks of negative performance, the major stock indexes actually finished flat, thanks to an end-of-month rally. Not surprisingly, May’s bumpy ride left many investors feeling buffeted from all sides, due to several contributing factors:
Higher interest rates. The Federal Reserve (the ‘Fed’) increased rates half a percentage point to kick off the month, the largest rate increase since 2000. Fed Chairman Jerome Powell confirmed that economic conditions remain uncertain, and additional rate hikes are expected over the next few months, as the Fed works to combat inflation.
Tech stock selloff. Traders and investors alike have lightened up on their tech stock exposure, with mega-cap names like Apple, Google, Amazon, and Facebook all down double digits year-to-date. There is speculation that higher interest rates may be problematic for tech companies due to potentially higher borrowing costs.
Disappointing retail earnings. Supply chain issues and higher costs due to inflation dragged down earnings for major retailers like Target and Walmart. Some retailers reported a drop in the number of transactions, suggesting that shoppers are limiting purchases to more essential items. Smaller retailers reported more encouraging figures, a positive sign for the health of the US consumer.
While we don’t know when things will settle down, we remain confident that a diversified, disciplined, long-term financial approach can weather the storm. We’re grateful to be part of your financial team. If there’s anything you need, please schedule some time with our office.