Hope you are all doing well. The S&P 500 closed with a fractional overall decline for the second week in a row. The Dow sustained a larger weekly loss of 1.6%, while the NASDAQ ended fractionally higher. The large-cap growth stock benchmark outperformed its value-oriented peer by a wide margin. The growth index was up about 0.9% for the week, while its value counterpart was down 1.1%. Duncan Sheik passed away this week. In addition to his hit song Barely Breathing, he won multiple Tony Awards for composing Spring Awakening. I have broken down this week’s update using songs from the musical.
The Word of Your Body
The markets have been anxiously awaiting word from the governing body of the central bank. We got that on Wednesday. In a unanimous vote, the U.S. Federal Reserve raised its benchmark interest rate for the first time since 2023. I don’t expect a series of hikes like what happened in 2022 and 2023. Inflation is rising but nothing like the pandemic-era inflation spike in 2022. That being said, Wednesday’s Fed projections showed that 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year. The current rate decision was largely priced into markets; investors focused more closely on the Fed’s updated economic projections and Chair Kevin Warsh’s tone in the press conference. Warsh reinforced a somewhat hawkish message by emphasizing the persistent inflation. Corporate earnings growth, overall economic strength, and a resilient labor market give the Fed wiggle room to use interest rates to combat inflation.
The Dark I Know Well
The market seemingly knows how to deal with and shake off rising oil prices. Oil traded in a wide range this week; U.S. crude peaked above $106 per barrel on Tuesday before slipping below $100 on Thursday and Friday. Oil at nearly $100 per barrel is still near a four-month high in the wake of recent price gains. It continues to be largely driven by developments in the Middle East. Oil prices can stay elevated near current levels without crashing the stock market because the global economy has adapted through lower baseline energy demand and strong corporate earnings from non-energy sectors.
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