Monday, May 16, 2022 - Weekly Market Update
Monday, May 16, 2022
In a volatile trading week, stocks extended their losses as economic growth and inflation concerns soured investor sentiment.
The Dow Jones Industrial Average dropped 2.14%, while the Standard & Poor’s 500 lost 2.41%. The Nasdaq Composite index fell 2.80% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 3.21%.1,2,3
A Turbulent Week
Inflation moved to center stage last week with the release of April’s Consumer Price Index (CPI) and the Producer Price Index. Both numbers came near their 40-year highs but were lower than March’s year-over-year numbers. The results heightened investor anxiety about future Fed monetary tightening and its impact on economic growth.
In recent weeks, technology stocks have borne the brunt of the downdraft as investors lightened up on risk exposures, with some of the mega-cap tech names getting swept up in the selling pressure. Cooling import price increases buoyed spirits on Friday, helping spark a rally that reduced the week’s losses.
Inflation Stays Hot
Investors were greeted with a mixed CPI report, looking for signs that inflation may be cooling. Year-over-year costs rose 8.3%, slower than the previous month but faster than consensus estimates. Excluding food and energy, core inflation climbed 6.2%. Buried beneath the headline number was a 5.1% yearly increase in shelter costs, the most significant increase since 1991. Shelter costs account for one-third of the CPI.4
Inflation has been a weight on markets all year. Investors are concerned that the persistence of higher prices may tip the economy into recession as increased spending on essential needs crimps consumers’ spending power.
This Week: Key Economic Data
- Tuesday: Retail Sales. Industrial Production.
- Wednesday: Housing Starts.
- Thursday: Existing Home Sales. Jobless Claims. Index of Leading Economic Indicators.
Source: Econoday, May 13, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
- Tuesday: Walmart, Inc. (WMT), The Home Depot, Inc. (HD).
- Wednesday: Cisco Systems, Inc. (CSCO), Target Corporation (TGT), Lowe’s Companies, Inc. (LOW), The TJX Companies, Inc. (TJX), Analog Devices, Inc. (ADI).
- Thursday: Applied Materials, Inc. (AMAT), Palo Alto Networks, Inc. (PANW), Ross Stores, Inc. (ROST).
- Friday: Deere & Company (DE).
Source: Zacks, May 13, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Food for Thought
"Though we see the same world, we see it through different eyes."
– Virginia Woolf
Tax Tip: Receive Your Tax Return Quicker With Direct Deposit
Want to receive your tax return quicker? The IRS shares that the best way to get your refund is to file your return online and provide your direct deposit info. In addition to receiving your refund quicker, there are a few other benefits of using direct deposit.
One benefit is splitting your refund into several financial accounts through direct deposit, including checking, savings, health and education, and certain retirement accounts. Using direct deposit is also fast, secure, and accessible. To sign up for a direct deposit, you need to provide your bank account number and routing number. Taxpayers should have this information available when ready to file because the IRS can't accept this information after filing a return.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov5
Healthy Living Tip: How to Start a Meditation Practice
If you’re interested in starting a meditation practice, the good news is that you don’t need much to get started. Here are some tips:
- First, find a place to meditate. It doesn’t have to be a dedicated space, but it should be calming and free from as many distractions as possible.
- Next, set a time limit. Even just 5 minutes of meditation a day is enough to get started.
- Now, it’s time for the actual meditation! The goal of meditation is to clear your mind of intrusive thoughts and be fully present where you are. Don’t focus on not thinking about anything at all. Instead, watch your thoughts float by as you stay centered in your breath.
- If your mind wanders, it’s okay! Gently bring it back to the present and focus on your breath or something around you.
Tip adapted from Mindful6
This Week's Wiser Riddle
Name two words in the English language that have the letter "I" twice in the middle of the word.
Last week’s riddle: A librarian finds that pages have been ripped out of a novel. Pages 28, 29, 148, 211 and 212 are torn out. Given this, how many separate sheets of paper have been torn from the book? Answer: 4 sheets of paper. Pages 211 and 212 will be on opposite sides of the same sheet of paper.
Photo of the Week
Japanese white-eye amongst pink Plumerias
Footnotes and Sources