Coming off the month of April

June 6, 2022

Coming off the month of April that saw the worst monthly performance for the stock market in 2 years, May began with a “buy the dip rally” before weakness in technology stocks once again weighed on the market.  What is often a quiet month heading into summer became a very volatile one with some of the best days since the pandemic began being followed immediately by some of the worst days.  All the major indices hit new 52-week lows during the month before a late month rally ahead of the Memorial Day weekend brought the S&P 500 back to unchanged for the month, leaving the widely followed index 13.3% lower for the year.  Oil continues to be a drag on the economy gaining another 11% to the highest monthly close since 2008.  A stronger dollar sent gold down nearly 4% for the month and the rate on the 10-year Treasury edged lower.

The new month began with a nice 3-day rally as some were seeing value in beaten down shares.  As expected, the Federal Reserve did raise interest rates by 50 basis points and suggested more 50 basis point increases were coming.  Investors liked the tough talk on inflation and sent the S&P 500 124 points higher.  The very next day the same information generated a 152-point plunge in the S&P 500 erasing early week gains.  On Friday we learned a better than expected 428,000 new jobs were created in April and the first week ended with the S&P 500 down .8%.  The second week began with a plunge in technology stocks that dragged the entire market lower.  Mid-week we learned inflation in April was slightly lower than March, but above expectations, which generated more selling.  The S&P 500 ended the week with a strong rally, but the widely followed index gave up another 2.4% for the week.  The 3rd full week saw a continuation of the selling as both Target and Walmart reported surprisingly disappointing quarterly results that sent the S&P 500 to its worst day in 2 years.  At the end of the week the S&P 500 had dropped another 3.1%.  This was the 7th consecutive week lower for the S&P 500, something we have not seen since 2001.  The Dow Jones Industrial average lost ground for an 8th straight week, something not seen since 1924!  The week before a 3-day weekend typically has an upward bias, but the week before Memorial Day 2022 was the best in 7 months.  Encouraging news on inflation and what some were seeing as attractive valuations sent the S&P 500 6.5% higher, completely wiping out the losses for the month.

June has historically been a very average month for the stock market, but recent volatility is likely to continue.  The negative forces are well known, China’s shutdown, rising oil prices, rising interest rates and the war in the Ukraine.  These forces will continue to weigh on the market until resolved, but you would expect the market to react positively to a resolution in any of these areas of concern.  The most likely short-term catalyst is a reopening of the Chinese economy that has been struggling under the suffocating zero Covid policy of the Chinese government.  China is the world’s second largest economy, and the global recovery will be tough without them.  Oil prices can fall as fast as they have been rising and as prices rise demand is likely to slow, ultimately making rising prices self-correcting.  Our biggest concern is stagflation, which is inflation without economic growth.  We have been concerned about stocks being richly valued but rising earnings and falling stock prices have reduced that concern.  We are closely watching and will be proactive to a big move up or a big move down.

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our NEW website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.  You can now listen to previous shows by going to www.iheart.com or using the iHeart app.

 

 

 

 

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