After a strong July rally, in fact the 17th best month for US stocks ever since 1950, stocks have since given back all their gains. What has been exceptionally unique this year has been the high correlation between bonds and stocks.
On August 26th, Jerome Powell spoke at the annual Jackson Hole Symposium. His speech, though short (only about 8 minutes), was very concise and a direct indication of the path the FED is willing to take to address inflation. “We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%.”
July provided a solid reprieve after a difficult first half of 2022, with investors buying the dip. The S&P 500 Index posting its strongest return since November 2020, up 9.2%.
The broad themes outlined at the beginning of the year – the evolving nature of the pandemic, central bankers’ balancing act and historically high inflation remain the prevailing themes, along with the rising probability of recession, these themes will likely drive capital markets volatility throughout the second half of the year.
Growing concerns of a global economic slowdown are materializing as investors wait to see if the Fed will have to tip the economy into recession to get inflation under control: we expect elevated market volatility to persist.
Please join our team for an update call to review market performance year-to-date, discuss some of the factors influencing markets and our thoughts going forward. The first five months of 2022 have not been easy to navigate. Continuous uncertainty after two-years of ambiguity is testing the markets. Inflation, labor shortages and supply disruptions related to the pandemic and Russia’s invasion of Ukraine are impacting the economy. Markets are being tested to balance these uncertainties while the Fed lifted their benchmark rate and has signaled more increases are likely to follow. Fiducient Advisors serves as a strategic investment research partner for U.S. Capital Wealth Advisors. Fiducient Deputy CIO, Brad Long, will provide clients with a timely update. Please reach out to your Financial Advisor with any questions.
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