For Investors, 2022 Is Turning Into A Test
Published Friday, May 6, 2022 at: 7:18 PM EDT
It’s been easy being a buy and hold investor. Until now.
Stock market investments, as measured by the Standard & Poor’s 500 index, approximately doubled in value in the past five years. It was up 26.9% in 2021, 18.4% in 2020 and 31.5% in 2019, and it is 59.3% higher than at the bottom of the Covid bear market in March 2020.
The stock market suffered another losing week and is in the throes of the longest weekly losing streak in over a decade. Here’s what investors need to know.
The Federal Reserve raised its policy rate by a half-percentage point on Wednesday for the first time since 2000, and Fed Chairman Jerome Powell at a press conference Wednesday repeatedly said “inflation is too high.” He indicated that the central bank would raise rates by another half-percentage point in both June and July
Inflation is raging at its highest rate in 40 years. Fed tightening has increased investor nervousness that the Fed would raise rates too much in the months ahead to tamp down inflation, and that it would end the two-year economic expansion. However, the Fed chairman also emphasized repeatedly at his press conference Wednesday, that the economy is nowhere near a recession currently.
Friday morning’s job situation report brought good news. Employers added 428,000 jobs in April. The unemployment rate remained at 3.6%, and the number of employees is nearly fully recovered from the peak reached during the last expansion before the pandemic struck.
The Institute for Supply Management (ISM) index of manufacturing activity in April was 55.4 and, more importantly, the ISM’s index of purchasing manager activity stood at 57.1. While both indexes have cooled from a boil in the past year, they are both nowhere near the reading of 50 that would indicate a recession might be near.
The Standard & Poor’s 500 stock index closed this Friday at 4,123.34. The index lost -0.57% from Thursday and is down -0.21% from last week. The index is up +59.3% from the March 23, 2020 bear market low but down -15.1% from the January 3, 2022 all-time high.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
- Stocks Have Soared Lately, But What Should You Expect Near And Long-Term?
- Investing In An Economy Beset By Multiple Anomalies
- Despite Bad Economic News, Stocks Rose 4% In The Week Ended July 29, 2022
- Amid Bad Data Releases, Leading Economists Predict No Recession
- Good News: Real Retail Sales Dropped Fractionally In The Past Year
- Financial Economic News Analysis
- The Good News Is All This Bad News
- Four Signs A Recession Could Be Short And Shallow
- Odds Of A Soft Landing Shrunk After Friday's News
- Bad Inflation Surprise Sends Stocks Down Sharply
- It Could Be A Long, Hot Summer For Investors
- What A Difference A Week Makes
- Amid Stock Market Turmoil, +2.3% Growth Projected In 2022
- Staying On Track Amid The Ukraine And Inflation Crises
- For Investors, 2022 Is Turning Into A Test
- Is The Economy Brightening? Or Is The Federal Reserve Slamming The Door On Growth
- Financial Economic News In Perspective
- Stocks Closed Lower This Week On Inflation Fears
- The Main Risk To Investors Now Is Federal Reserve Policy
- Service Sector Jobs Are Catching Up
- Stocks Returned +8.3% More Annually Than 90-Day T-Bills In Past 20 Years
- Perspective Amid A Moment Seeming Fraught With Investment Risk
- Two Years After The Pandemic Began
- Turning The Page On A Dark Period In History