Sometimes, Even Bears Become Exhausted

Coming into last week’s shortened holiday week, market conditions were decidedly tilted toward adverse outcomes, as investor and consumer sentiment remains incredibly weak. But following three straight weeks of declines and back-to-back 5%+ weekly declines in the S&P 500 Index (which has only happened seven times since WWII), stocks found a way to rally higher last week.

Investors Should Remain Patient as Markets React to the Fed’s Rate Hike, Plans for July Increase

Stocks continued their aggressive slide lower last week, with the S&P 500® Index falling 5.8% — its worst weekly performance since March 2020. All eleven S&P 500 sectors declined by at least 4% or more on the week, with Energy dropping an eyepopping 17.2%, also logging its worst week of performance since March 2020.

Now is the Time for Investors to Focus on What They Can Control

Last week, we noted that good news is bad news for the markets. Suggesting economic data that comes in stronger than expected could pressure the Federal Reserve to tighten monetary policy more aggressively. Therefore, stock prices may react negatively to incoming evidence that shows economic activity is still running hot. But sometimes, bad news is just bad news. Last week’s consumer price inflation report is a glaring example that elevated prices for just about everything are an ongoing problem for the economy and markets. 

Investors Increasingly Looking for a Goldilocks Scenario

Stocks couldn’t carry their momentum forward last week after breaking a seven-week losing streak, as the S&P 500® Index dropped 1.2%. The NASDAQ Composite fell roughly 1.0% during the shortened holiday week, and the Dow Jones Industrials Average lost 0.9%.