A Rally Continues on Calming Inflation Fears
Positive signs of inflation and growth have contributed to a continuous surge in the stock market since late May with minimal setbacks. The S&P 500 Index has achieved its longest consecutive daily gains since November 2021 and its strongest weekly performance since March’s end. Although growth stocks and large caps have regained their momentum, the market’s appreciation has narrowed slightly.1
Any rally is appreciated, but we must understand that our current rally is driven primarily by just a few companies. These may change as things fall in and out of favor with investors, so staying diversified in quality positions remains crucial.
Are More Rate Hikes Coming?
Federal Reserve officials kept rates steady at last week’s Federal Open Market Committee (FOMC) meeting. However, a majority of committee members indicated at least two more quarter-point rate hikes were likely before year-end.2
Fed Chair Jerome Powell commented that he saw progress in fighting inflation and that no decision was made regarding any future rate increase, saying that members will assess the economic impact of the cumulative rate hikes before the July 25-26 FOMC meeting.3
The Fed raised its 2023 economic growth forecast to 1%, up from its March forecast of 0.4%. The Fed also lowered its unemployment projection to 4.1% from its earlier estimate of 4.5%.4
While we remain optimistic about the market’s potential, it is crucial to maintain a balanced and diversified portfolio. Our investment philosophy includes regular portfolio reviews to ensure alignment with your long-term financial goals. Our team is available to assist you in making informed investment decisions based on your individual risk appetite and objectives.
Sources:
1. T Rowe Price, June 2023
2. AP News, June 14, 2023.
3. CNBC, June 14, 2023.
4. CNBC, June 14, 2023.
Category: Financial Service Team, Market Matters
