07|06|2022

Are We There Yet? | July 1, 2022

AUTHOR: Kerry J. Hilsabeck, CFP®
TITLE:    Investment Adviser Representative
TAGS:     Jobs, Goods, Yield Curve, Manufacturing, Services, S&P500


Markets are evaluating possible recession implications. With all the recent market movement, the big question is, “Are we there yet?”

Monday   S&P 500 .30% | NASDAQ .79%

Markets began the week looking for direction. Positive data came through for housing markets and manufacturing orders. Pending home sales rose unexpectedly by .7% and Core Goods Orders beat forecasts. Production outlook leads in terms of giving markets a wayfinder on future growth, so this was a welcome sight given recent readings on consumer sentiment.

Tuesday   S&P 500 2.01% | NASDAQ 2.98%

The S&P500 attempted to recover Monday’s losses following dividend increases by several major lenders. Major banks passed a stress test done by the Federal Reserve on their lending capacity in which they concluded that banks will still be able to lend to households and businesses even during a recession. Losses accelerated mid-morning through the close due to the release of data on declining Consumer confidence.

Wednesday   S&P 500 .07% | NASDAQ .03%

Early trading moved upward but fell soon after. Negative GDP figures were confirmed for Q1 which is a gauge for output domestically. Q2 results remain to be seen but producers’ commitment to keeping shelves stocked in coordination with bringing inflation down could keep business propped up at least for the time being.

Thursday   S&P 500 .88% | NASDAQ 1.33%

The day started off positive after data was released showing prices for goods may be cooling down. Optimism faded quickly, however, with projections surrounding another quarter with negative GDP. The Federal Reserve Bank of Atlanta, a key tracker of the data, estimates that GDP is at -1.0%. This increases the chances of a technical recession.

Friday   S&P 500 1.06% | NASDAQ .90%

Little data came out to close the week before the holiday weekend. Most movement could be attributed to equity shifts with the recent selloff and opportunistic buyers rebalancing their portfolios.

Conclusion   S&P 500 2.2% | NASDAQ 4.23%

The jury is still out on whether the economy is in a recession, but more and more data points to that reality. The question, although too early to tell, would be how deep and long a recession would last in the current economy. Next week will provide more insight as Fed Minutes are released regarding the state of monetary policy (rising rates) and its objective to quell inflation.

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