The worst first 6 months for the market in 52 years

September 2, 2022

The worst first 6 months for the market in 52 years were followed by a strong rally in July, but the market struggled again in August.  Corporate earnings and economic numbers were giving mixed signals and interest rates moved higher to levels not seen since June.  Rising interest rates pushed the dollar to its highest level in 20 years which added additional headwinds for multi-national companies.  Coming into the month there was a sense that inflation pressures were easing and that might encourage the Federal Reserve to take a more measured approach to raising interest rates.  Near month end Federal Reserve Chairman Powell gave a short 7-minute speech that was quite bearish and sent the market into a nosedive.  He made it very clear the Fed was not done raising interest rates and that to get inflation under control businesses and individuals will be feeling some pain.  The S&P 500 ended the month with a loss of 4.2% and is now 17% lower for the year.  Oil prices dropped 8%, a 3rd straight month of declines, which helped send gasoline prices sharply lower and consumer confidence higher for the first time in 4 months.  The dollar hit a 20 year high which helped gold lose 3.3%

Coming off a nice rally in July the market began the month moving higher on the back of good economic numbers.  The U.S. added a huge 528,000 nonfarm payroll jobs in the month, more than twice the consensus forecast, and the unemployment rate edged down to 3.5%, matching the half-century low reached before the pandemic.  The first week ended with the S&P 500 moving .4% higher.  The second full week of the month was the strongest for the month and was a busy news week.  Biden’s Build Back Better green bill passed under the disguise of the Inflation Reduction Act and the FBI executed an unprecedented search warrant on President Trump’s personal home.  Despite the big headlines the market was focused on one thing, the CPI report on Wednesday, and when that showed inflation had risen 8.5% year over year, but was unchanged for the last 30 days, the market rallied strongly to week’s end.  At the end of the week the S&P 500 was up 3.3%.  During the third full week rising interest rate weighed on the market.  The Federal Reserve, as expected, raised the Fed Funds rate by 75 basis points and said that will continue raising until inflation starts showing a steady decline. For the week the S&P 500 was down 1.2%.  The last full week began and ended with large stock market declines driven by rising interest rates and bearish comments from the Federal Reserve.  The S&P 500 gave up all the gains for August and ended the week down 4%.  The selling continued into the last few days of the month.

September is statistically the worst month of the year for stocks and is the only month that has historically closed in the red.  Perhaps some of the selling we saw in late August was in preparation for a weak September.  With the market already down 17% for the year and stock valuations down to levels we have not seen in several years, some may take advantage during September.  Seasonality does play a role so we will continue to be cautious in September and look for opportunities going forward.  However, seasonality is a guide and not an absolute, in 2013 September and October were two of the best months of the year.  We have been playing defense over the last few weeks and will continue that approach going forward.  There will be opportunities, but caution and patience will be our approach.

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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