May Market Update

It’s finally starting to feel like summer outside (t least for a few days). I feel like spring in the Midwest is really a combination of all the other seasons sometimes on the same day! But it summer will come!

It feels like summer for the stock market too. There’s been some turbulence this spring due to major banking issues and subsequent government actions, but after that, the markets have seemed to calm down a little bit. Quiet compared to the first quarter, where the S&P 500 was up almost 7.5%.

Recession and Inflation

However, there are two factors that seem to be holding the markets back. The first is recessionary fears. It’s not surprising that economic forecasters have predicted that a recession could start soon, or some would argue that we’re already in one. The GDP numbers support this as they are significantly slowing down.

The second factor is inflation and higher interest rates, which have been impacting consumers and companies alike. Consumer confidence is going down, and their spending habits have been affected by inflation. This, in turn, impacts company earnings and the stock market. While earnings have been mixed, it’s clear that higher rates have had an impact on the bottom line of different companies.

We’re seeing the double impact of higher interest rates and inflation hitting both consumers and companies. These factors are holding the market back and could potentially lead to more volatility. Additionally, the actions of the Federal Reserve (Fed) play a significant role. The sooner the Fed stops raising rates, the better. However, it remains to be seen how and when that will happen.

The Debt Ceiling and Global Tensions

Another crucial factor is the debt ceiling. The ongoing debate around raising the debt ceiling has an undeniable impact on the market. Currently, House Republicans have passed an increase in the debt ceiling, but it includes proposed cuts. The White House, however, has vowed not to negotiate unless there are no contingencies. This lack of certainty does not bode well for the markets either.

With the uncertainty surrounding the Fed’s actions, the debt ceiling debate, recessionary fears, high inflation, and interest rates, the market seems to be at a stalemate. It’s uncertain how these factors will play out and what their overall impact will be. Moreover, other global tensions can also influence the market.

Investment Stratey

In times like these, it’s essential to have a well-planned strategy. Our portfolio managers are always working to put our clients in the best possible position. We aim to invest in companies that can weather the storm, maintain their earnings, and perform well during these challenging times. It’s crucial to avoid companies that are more exposed to the negative effects of higher interest rates and recessionary fears.

Overall, it’s important to have a stable plan in place that includes downside protection, such as green money and other safeguards within your portfolio. While we cannot control what happens in the market, we can ensure that your retirement income is secure and that you feel confident regardless of market fluctuations. Learn more in our 2 part series, How to Protect Your Money and Your Retirement.

If you have any questions or concerns, please don’t hesitate to reach out. We’re here to ensure that you’re well taken care of in this unpredictable market.