In this week’s recap: Confidence in Fed helps spark market rally.
Weekly Economic Update
Presented by John Glowacz & Jim Donewald, May 30, 2022
THE WEEK ON WALL STREET
Stocks posted solid gains for the week, buoyed by the release of Fed meeting minutes and upbeat earnings from mid-size and discount retailers.
The Dow Jones Industrial Average jumped 6.24%, while the Standard & Poor’s 500 advanced 6.58%. The Nasdaq Composite index gained 6.84% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.09%.1,2,3
A GOOD WEEK
The stock market staged a broad rally last week, ignited by the release of minutes from the May’s Federal Open Market Committee (FOMC) meeting. The meeting notes eased concerns that the Fed might pursue a more aggressive monetary tightening stance than the Street had anticipated.
Investor sentiment rose owing to solid earnings and encouraging guidance from several mid-size and discount retailers, which eased concerns about the health of the American consumer. A smaller rise in the personal consumption expenditures price index, the Fed’s preferred measure of inflation, triggered a strong rally on Friday. The powerful move ended seven straight weeks of stock losses.4
The minutes from May’s FOMC meeting were released last week. They confirmed the likelihood of at least two successive 50 basis point interest rate hikes. The minutes also indicated they might need to raise rates to a level that acts to restrict economic growth, something that Fed Chair Jerome Powell acknowledged might be a painful process.5
Not all Fed members are fully committed to the more aggressive rate hikes. Last week, Atlanta Fed president Raphael Bostic wrote that a pause in rate increases in September might be appropriate. He joined other members in suggesting that economic conditions may warrant reconsideration of additional rate hikes beyond those already signaled by Powell.6
T I P O F T H E W E E K
A strategy is better than an assumption when it comes to couples and money. Discuss your financial goals together and stick to the approach you make to pursue them.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Consumer Confidence.
Wednesday: Institute for Supply Management (ISM) Manufacturing Index. Jobs Openings and Labor Turnover Survey (JOLTS).
Thursday: Automated Data Processing (ADP) Employment Report. Jobless Claims. Factory Orders.
Friday: Employment Situation. Institute for Supply Management (ISM) Services Index.
Source: Econoday, May 27, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: Salesforce, Inc. (CRM), HP, Inc. (HPQ).
Wednesday: MongoDB, Inc. (MDB).
Thursday: Broadcom, Inc. (AVGO), Hormel Foods Corporation (HRL), DocuSign (DOCU), CrowdStrike (CRWD).
Source: Zacks, May 27, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
“Deep breaths are very helpful at shallow parties.”
T H E W E E K L Y R I D D L E
There are 2 nouns in the English language that become men’s names when you capitalize them – and when you capitalize them, you alter their pronunciation. Name either or both of these 2 nouns, both of which end in ‘b’.
LAST WEEK’S RIDDLE: Two trains are crossing America from coast to coast, traveling over 3,000 miles of track. The Gentle Zephyr is going west at 70mph; the Western Wind is headed east at 80mph. So which train will be closer to the east coast when they roll by each other in Kansas?
ANSWER: Neither. When the trains meet, they will be at the same point - therefore the same distance from the east coast.
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Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
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1. The Wall Street Journal, May 27, 2022
2. The Wall Street Journal, May 27, 2022
3. The Wall Street Journal, May 27, 2022
4. CNBC, May 27, 2022
5. The Wall Street Journal, May 25, 2022
6. The Wall Street Journal, May 25, 2022