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Looking Ahead and Holding On

July 12, 2022

June was another roller coaster month to end the first half of a roller coaster year. The S&P 500 Index had a total return of -8.26% for the month contributing to its current slide of -17.52% for the year. The Nasdaq Composite Index had a total return of -8.65% for the month of June while reporting a drop of -25.31% for the year. The majority of the decline came in the second week of the month just ahead of reports of higher-than-expected Consumer Price Index (CPI) numbers--as measured by CPI-U1--and a rare 75 basis point hike of the target for the federal funds rate by the Federal Reserve, a move not seen since 1994.2 

The Federal Reserve is ostensibly attempting to halt inflation, or at least to slow it down. The U.S. central bank is now in an unenviable position between trying to slow inflation, but not collapse the domestic economy.

Looking back through the data for June, the S&P has averaged slightly negative for the month over the previous 20 years, however the last negative return of this magnitude was in 2008 amidst the end of the housing bubble and the “Global Financial Crisis”.  Looking forward, July has tended to be one of the stronger months over the last 20 years with an average return of 1.48%, and we saw the lows from mid-June hold at the end of the month so we could see some reprieve from these moves lower but only time will tell.

Rob Dailey
Portfolio Management Analyst

Data Source: Bloomberg Terminal
1https://www.bls.gov/news.release/cpi.t01.htm
2https://www.cnbc.com/2022/06/15/fed-hikes-its-benchmark-interest-rate-by-three-quarters-of-a-point-the-biggest-increase-since-1994.html
The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.

The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.

The consumer price index (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by households.

The global financial crisis (GFC) refers to the period of extreme stress in global financial markets and banking systems between mid 2007 and early 2009. (Source: https://www.rba.gov.au/education/resources/explainers/the-global-financial-crisis.html)

There are certain limitations to technical analysis research, such as the calculation results being impacted by changes in security price during periods of market volatility. Technical measurements are one of many indicators that may be used to analyze market data for investing purposes and should not be considered a guaranteed prediction of market activity.

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