Markets “In a Nutshell” for June 27, 2022
Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 5.40%, the S&P 500 was up 6.40%, and the NASDAQ rose 7.50%. Foreign stocks (MSCI EAFE) were also up, rising 0.80%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 3.13%. (Data source: Wall Street Journal)
First Half Economic Recap
The US economy came into the year coming off a strong 2021 where the economy grew 5.7% as we bounced back after a weak 2020 due to the pandemic. People expected the economy would not grow nearly as fast in 2022, but many still expected it to grow. The beginning of 2022 has not been what many thought, the economy has had to absorb very high inflation and it has yet to come down and now the consumer is starting to not spend as much as costs continue to rise. Due to this, we saw GDP contract in the first quarter and are now in danger of a “technical” recession which is when we see two-quarters of GDP contracting. While some do not consider this an “official” recession, two quarters of contracting GDP shows weakness for the economy, which is a major worry.
First Half Market Recap
The market was coming off a very strong few years and many expected that we would not continue to see the rise in equities that we saw in recent years. Coming into the year we knew the Fed would have to raise rates which would put pressure on the market, however many did not expect the Fed would have to be this aggressive to slow inflation. Even after the Fed has been more aggressive than they have in a long time, people still think that they are too far behind and need to be even more aggressive. As the Fed continues to be more aggressive, the market believes the chances of a recession continue to rise. Although the market has fallen by more than 20%, the good news is valuations have come down by 26% meaning companies are now valued at more reasonable levels than before. The market is expected to have continued volatility as recession fears continue, inflation still has not come down, and the war in Ukraine continues to go on putting more strain on the World Economy.
How much has the price of oil per barrel increased just this year? (Scroll Down for Answer)
Have a Great Week!
4. 43%, The price of oil per barrel has increased over 43% to over $107 per barrel currently. This has put a strain on the American consumer as they are paying more at the pump, which forces them to spend less in other places.