With two daily moves of over 2% and one over 3%, the S&P 500 had another tumultuous week before settling at a 2022 closing low of 4131. By the numbers, the S&P 500 index suffered its worst April performance since 1970 and worst month since the pandemic riddled March 2020. All told, the S&P 500 now stands in correction territory, down over 14% from its 3 January closing record high. Stocks struggled in April amid Federal Reserve monetary tightening, rising rates/inflation, concerns of a slowing global economy and the Ukraine war entering its third month. On the economic front, Thursdays GDP number didnt help as it came in at a negative 1.4% for the first quarter, well below market forecasts of a 1.1% expansion. From a technical perspective, the S&P 500 spent the entire week below its 50 day Moving Average (MA), which was below its 200 day MA (200>50>$). So where do we go from here? At the end of 2021, the Top 5 holdings of the S&P 500 (Apple, Microsoft, Amazon, Facebook/Meta, Alphabet/Google) had about a 20% weighting. All five of those companies reported earnings this past week, and three of them had weekly losses and weak guidance for the second quarter. This was highlighted on Friday when Amazon reported its first loss in seven years. As a result, AMZN stock closed down around 14% for its biggest daily drop since 2006. Since those five companies strongly influence market direction, this does not bode well until they next report the last week of July. Additionally, the S&P 500 is only 17 points above its 2022 intraday low, and the possibility of it breaking through to the downside and making a run at that 4000 psychological level exists. Then throw in Wednesdays Fed meeting with an expected interest rate hike and Fridays April employment numbers,. For TSP TIPS, with all funds having negative performance rankings and the C, S and F funds hitting new 2022 lows on Friday, we are recommending the following reallocation.
With two daily moves of over 2% and one over 3%, the S&P 500 had another tumultuous week before settling at a 2022 closing low of 4131. By the numbers, the S&P 500 index suffered its worst April performance since 1970 and worst month since the pandemic riddled March 2020. All told, the S&P 500 now stands in correction territory, down over 14% from its 3 January closing record high. Stocks struggled in April amid Federal Reserve monetary tightening, rising rates/inflation, concerns of a slowing global economy and the Ukraine war entering its third month. On the economic front, Thursdays GDP number didnt help as it came in at a negative 1.4% for the first quarter, well below market forecasts of a 1.1% expansion. From a technical perspective, the S&P 500 spent the entire week below its 50 day Moving Average (MA), which was below its 200 day MA (200>50>$). So where do we go from here? At the end of 2021, the Top 5 holdings of the S&P 500 (Apple, Microsoft, Amazon, Facebook/Meta, Alphabet/Google) had about a 20% weighting. All five of those companies reported earnings this past week, and three of them had weekly losses and weak guidance for the second quarter. This was highlighted on Friday when Amazon reported its first loss in seven years. As a result, AMZN stock closed down around 14% for its biggest daily drop since 2006. Since those five companies strongly influence market direction, this does not bode well until they next report the last week of July. Additionally, the S&P 500 is only 17 points above its 2022 intraday low, and the possibility of it breaking through to the downside and making a run at that 4000 psychological level exists. Then throw in Wednesdays Fed meeting with an expected interest rate hike and Fridays April employment numbers,. For TSP TIPS, with all funds having negative performance rankings and the C, S and F funds hitting new 2022 lows on Friday, we are recommending the following reallocation.