Hoping that you have had a great start to June! As we all embrace the “return to normal” in our lives, I thought I’d touch base with a few market-related insights worth noting. As always, I’m here to answer any questions you may have or catch up on your financial plans.
May Market Performance
May was an abnormal month for the U.S. markets despite some volatility during the middle of the month, driven by a weak jobs number on May 7th and a very high CPI (Consumer Price Index) data release on May 12th. This inflationary data showed inflation increasing at a higher-than-expected rate. However, the U.S. stock market indices took the employment and inflationary data mostly in stride. For May, the S&P 500 added 0.02%, the Dow 30 tacked on over 1.86%, and the tech-heavy Nasdaq shed 1.69%.
Inflation Spikes in May
May’s Consumer Price reading surged far beyond market expectations. Translated to lay terms, it means that the inflation rate is 3.1%, highest recorded for more than a decade. The other number that came out, and both came out the Friday of Memorial Day weekend, was the personal savings rate of -13%, worst change in 40 years. Putting the two together means that people have less money in their pockets and things are costing more. If it was not a slow news day, this would have been addressed at the highest levels of government! The effects of inflation have come close to home. From bread to gasoline to market rents, prices have increased notably across the board. And since higher inflation means that it could take more dollars to purchase a widget, this could bode well for U.S. equities. However, as it could take more dollars to purchase a stock, this could theoretically lend support to higher equity prices. This all may be temporary, but we are keeping a watchful eye on the markets.
While there is no crystal ball, it is beneficial to keep a pulse on the message of the markets on a monthly, weekly, and even daily basis. In a market like this, it may be wise to be on the lookout for any meaningful pullbacks to find long-term opportunities at lower prices. Given the seasonal tendency for a softer period from June through October, it could be a wise time to discuss your portfolio to plan for any opportunities that may arise.
With that in mind, how is your situation–and has it changed? Have any events happened in your life that could result in making any adjustments? Let me know! There are numerous ways to take advantage of market seasonality, sector rotation, index reconstitution, and a higher inflationary environment. Please don’t hesitate to reach out; I am always here.
Craig J. Ferrantino, CWS®
Certified Financial Fiduciary®