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Weekly Economic Update: May 31st, 2022

May 31st, 2022

Weekly Market Update

In this week’s recap: Confidence in Fed helps spark a market rally.

The Week on Wall Street

Stocks posted solid gains for the week, buoyed by the release of Fed meeting minutes and upbeat earnings from mid-size and discount retailers.

The Dow Jones Industrial Average jumped 6.24%, while the Standard & Poor’s 500 advanced 6.58%. The Nasdaq Composite index gained 6.84% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.09%.^1,2,3

A Good Week

The stock market staged a broad rally last week, ignited by the release of minutes from the May’s Federal Open Market Committee (FOMC) meeting. The meeting notes eased concerns that the Fed might pursue a more aggressive monetary tightening stance than the Street had anticipated.

Investor sentiment rose owing to solid earnings and encouraging guidance from several mid-size and discount retailers, which eased concerns about the health of the American consumer. A smaller rise in the personal consumption expenditures price index, the Fed’s preferred measure of inflation, triggered a strong rally on Friday. The powerful move ended seven straight weeks of stock losses.⁴

Fed Minutes

The minutes from May’s FOMC meeting were released last week. They confirmed the likelihood of at least two successive 50 basis point interest rate hikes. The minutes also indicated they might need to raise rates to a level that acts to restrict economic growth, something that Fed Chair Jerome Powell acknowledged might be a painful process.⁵

Not all Fed members are fully committed to the more aggressive rate hikes. Last week, Atlanta Fed President Raphael Bostic wrote that a pause in rate increases in September might be appropriate. He joined other members in suggesting that economic conditions may warrant reconsideration of additional rate hikes beyond those already signaled by Powell.⁶

Tip of the Week

A strategy is better than an assumption when it comes to couples and money. Discuss your financial goals together and stick to the approach you make to pursue them.

Radio

Time Change! Retire Ready with David Nicholas will now be airing on Saturdays at 6:00 PM on 95.5 WSB. Be sure to tune in this weekend! If you missed this past weekend's show, CLICK HERE to listen!

Media

Be sure to subscribe to our YouTube page for all of David’s media commentaries CLICK HERE!

[yotuwp type="videos" id="C6bvNAA2B1E" ]

Good time to consider putting money to work. Investors should keep a close eye on energy XLE, pharmaceuticals PPH, and Tesla TSLA under $650. Watch David Nicholas on Fox Business with Stuart Varney last week, 5/24.

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