Recap | Week Ahead | Net Results

The last time the U.S. experienced stagflation (and one of the few instances in history) was the late 1970s and early 1980s.

“The economy is much different now than back then. It was 10% unemployment and high single-digits inflation. Right now we have 3% growth, and we have inflation at 3%. I don’t really understand where the talk of stagflation is coming from. I don’t see the ‘stag’ or the ‘flation.’” – Jerome Powell, 5/1/24 FOMC Press Conference

Last week's market recap:

The S&P 500 closed the week up .56%. Year-to-date the index is up 7.99%
NASDAQ closed the week up 1.44%. YTD the index is up 7.85%
U.S. Aggregate Bond index was up 1.17%. YTD the index is down -2.06%
10-Year Treasury Rate decreased, ending the week at 4.50% down from 4.67% the prior week
- Fed Funds Target rate remains at 5.25-5.50%
The 1-Year Treasury is yielding 5.13%
A 6 Month Treasury is yielding 5.37%

The week ahead:

Federal Reserve officials speak
Updates on consumer sentiment data
Earnings Season: Disney, Palantir, UBS, Toyota, Uber, Airbnb etc.

Trifecta:

Last week, Fed policy, the jobs market, and corporate earnings were all in focus. The net result was bullish.

Fed Policy:

The market was jittery for a moment with some economists starting to consider possible rates hikes. The Fed is not satisfied with 3% inflation, but the Fed is well positioned to address different paths.

Jobs Market:

Job gains are slowing (reigniting hopes for 2024 rate cuts), but the remain consistent with a healthy labor market.

Corporate earnings:

Rising earnings expectations have been supportive of market gains. Over 80% of the companies in the S&P 500 have reported Q1 earnings. Of these companies, 77% have reported actual earnings per share above estimates.

It is important to remember, higher rates are normal. The market can tolerate high rates for as long as the economy and earnings expectations grow as well.

Source: BlackRock Weekly Commentary

As always, let us know if you have any questions.

Best,

CRA Investment Committee

Matt Reynolds CPA, CFP®

Tom Reynolds, CPA

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP®

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP®

Phillip Tompkins, CFP®

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