- Stocks were mostly down last week. We saw global markets (represented by the MSCI All Country World Index) down -0.6% and domestic stocks (represented by the S&P 500 Index) down -1.0%. We saw emerging markets (represented by the MSCI Emerging Markets Index) post a positive weekly gain of 1.7%. U.S. small companies (represented by the Russell 2000 Index) lagged the pack, posting a -5.1% return.
- Corporate earnings season got off to a strong start with mostly big banks posting earnings. According to FactSet, 85% of companies that reported exceeded analyst expectations. We’ll see many more reports over the coming weeks.
- Inflation was once again top of mind last week as reports showed consumer prices were about twice the consensus estimate. It was the fastest core rate since the early 90s. Looking under the hood showed that used car prices were responsible for about a third of the gain.
- With inflation headlines comes a focus on the Federal Reserve and interest rates. In his rhetoric last week, Chairman Jerome Powell stuck to their stance that they believe inflation is transitory, but reassured the market they would raise rates if that stance changed.
- The remaining economic news was mixed for the week. The retail sales report showed a 0.6% gain in June, which was higher than expected. On the flip side, the consumer sentiment gauge dropped to the lowest level since February, which indicates that the public is concerned over things like inflation and COVID variants.
- I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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