The S&P 500 couldn't recover from last Friday's jobs report and has now fallen the last five days, closing Friday at 4458. On the economic front, Thursdays new claims for unemployment insurance hit a new post pandemic low of 310,000. Then Fridays Producer Prices Index (PPI) report showed it rising to an 8.3% annual rate, its biggest advance since 2010. Next Tuesday we have more inflation news with the release of the Consumer Price Index (CPI), but then no high impact economic numbers are on the calendar until the 21 September Fed meeting. From a technical perspective, last week we mentioned that the S&P 500 has not had a 5% pullback this year. From a last record high of 4536 on 2 September, the S&P 500 has now retrenched 1.7%. What is more concerning is that on each of this weeks trading days the S&P 500 1) opened lower than the previous days open, 2) closed lower than the previous days close and 3) closed lower than that days open. It should also be noted that Fridays daily loss was the greatest since 18 August, and it closed at the weeks low. Given the lack of upcoming economic news and the fact that earnings season is over, there might not be much impetus for the markets to be bullish. For TSP TIPS, the above S&P 500 comments ring true for the C fund. The I fund added on another record high on Tuesday, making it four in a row looking back to the previous week. Lastly, the S fund Performance Ranking fell from 9.54 last Friday to 6.12 this Friday, while retrenching 2.7% since its most recent high on 2 September. Given this scenario, we are recommending a decrease in the overall equity allocation and adding in some diversification with an allocation to the I fund.
The S&P 500 couldn't recover from last Friday's jobs report and has now fallen the last five days, closing Friday at 4458. On the economic front, Thursdays new claims for unemployment insurance hit a new post pandemic low of 310,000. Then Fridays Producer Prices Index (PPI) report showed it rising to an 8.3% annual rate, its biggest advance since 2010. Next Tuesday we have more inflation news with the release of the Consumer Price Index (CPI), but then no high impact economic numbers are on the calendar until the 21 September Fed meeting. From a technical perspective, last week we mentioned that the S&P 500 has not had a 5% pullback this year. From a last record high of 4536 on 2 September, the S&P 500 has now retrenched 1.7%. What is more concerning is that on each of this weeks trading days the S&P 500 1) opened lower than the previous days open, 2) closed lower than the previous days close and 3) closed lower than that days open. It should also be noted that Fridays daily loss was the greatest since 18 August, and it closed at the weeks low. Given the lack of upcoming economic news and the fact that earnings season is over, there might not be much impetus for the markets to be bullish. For TSP TIPS, the above S&P 500 comments ring true for the C fund. The I fund added on another record high on Tuesday, making it four in a row looking back to the previous week. Lastly, the S fund Performance Ranking fell from 9.54 last Friday to 6.12 this Friday, while retrenching 2.7% since its most recent high on 2 September. Given this scenario, we are recommending a decrease in the overall equity allocation and adding in some diversification with an allocation to the I fund.