Weekly market wrap

With just a few days away from the end of June, stocks gained some ground last week but remain down about 10% in Canada and nearly 20% in the U.S., the S&P 500's worst first six months of any year since 19701. Aggressive central-bank tightening, concerns around inflation, and the effect of these two factors on growth have led to a rapid adjustment in interest rates, valuations, and sentiment. We think that the economy will continue to slow in the quarters ahead, reflecting the lagged impact of policy tightening. However, the year-to-date sell-off in both stocks and bonds has improved future returns for long-term investors. We'd offer the following perspective on how the economy, stocks and bonds are shaping up at the midyear point and what could be in store for the second half.
Source: Morningstar, Edward Jones as of 6/23/22. Stocks represented by the S&P 500, bonds by the Bloomberg Barclays U.S. aggregate bond index, and commodities by the Bloomberg Commodities index. Past performance does not guarantee future results. Market indexes are unmanaged and cannot be invested into directly.
The graph shows returns for stocks, bonds and commodities through the first half of this year, and how they compare with the returns of an average year.
First-half assessment:
Second-half prognosis:
Source: Bloomberg, June FOMC projections
The graph shows U.S. real GDP growth and the Fed's recent projections.
First-half assessment:
Second-half prognosis:
Source: FactSet, Edward Jones, 6/23/22. Past performance does not guarantee future results. Market indexes are unmanaged and cannot be invested into directly.
The graph shows that this year's decline in stocks has been exclusively driven by an adjustment in valuations rather than a drop in earnings estimates.
First-half assessment:
Second-half prognosis:
Source: FactSet Edward Jones. Past performance does not guarantee future results.
The graph shows the cycle peaks in the 10-year Treasury yield and the Fed funds rate
Angelo Kourkafas, CFA
Investment Strategist
Sources: 1. Bloomberg, 2. FactSet, Edward Jones calculations
INDEX | CLOSE | WEEK | YTD |
---|---|---|---|
TSX | 19,057 | 0.7% | -10.2% |
S&P 500 Index | 3,912 | 6.4% | -17.9% |
MSCI EAFE * | 1,874.19 | 2.8% | -19.8% |
10-yr GoC Yield | 3.32% | -0.1% | 1.9% |
Oil ($/bbl) | $107.59 | -0.4% | 43.1% |
Canadian/USD Exchange | $0.77 | 1.2% | -2.2% |
Source: Factset 06/24/2022. Bonds represented by the iShares Core U.S. Aggregate Bond ETF. Past performance does not guarantee future results. * Source: Morningstar, 6/27/2022.
Economic data being released this week include GDP by industry on Thursday.
Angelo Kourkafas is responsible for analyzing market conditions, assessing economic trends and developing portfolio strategies and recommendations that help investors work toward their long-term financial goals.
He is a contributor to Edward Jones Market Insights and has been featured in The Wall Street Journal, CNBC, FORTUNE magazine, Marketwatch, U.S. News & World Report, The Observer and the Financial Post.
Angelo graduated magna cum laude with a bachelor’s degree in business administration from Athens University of Economics and Business in Greece and received an MBA with concentrations in finance and investments from Minnesota State University.
The Weekly Market Update is published every Friday, after market close.
This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.
Investors should understand the risks involved of owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.
Past performance does not guarantee future results.
Market indexes are unmanaged and cannot be invested into directly and are not meant to depict an actual investment.
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