The S&P 500 had its worst week since March 2023, down just over 3% and closing Friday at 4967. We usually look at daily market action, but the recurring theme this week was the S&P 500 now having six consecutive down days. On Friday the Fed released their latest semiannual Financial Stability Report, which provides 1) their assessment of the U.S. financial system stability and 2) survey results from 25 financial and academia professionals. Coming in as no surprise, Persistent Inflation and Monetary Tightening remained the highest risk at 72%, the same as last October. However, what was surprising was Policy Uncertainty. Ranked the lowest of the five risks in October with a score of 24%, it jumped into second place with a score of 60%. Factors included uncertainty over trade and foreign policy, escalating geopolitical tensions, and the upcoming November elections. These are two major takeaways, but if you would like more detail, the report is readily available at the Feds website. From a technical perspective, just three Fridays ago (28 March), the S&P 500 made a new record high. After three straight down weeks, the S&P 500 is now just over 5% below that level and closed below that psychological 5,000 level on Friday. The S&P 500 is also below its 20 and 50 day Moving Averages (MAs), and the 20MA is tracking to cross below the 50 MA this week. From a trending perspective, the S&P 500s weekly bar chart again had a lower high and lower low than the previous weeks high and low. And finally, the 10-year Treasury Note yield has increased over the last three weeks, stands at a Year To Date (YTD) high, and at levels not seen since mid-November. Remember that increasing bond yields put pressure on equities. For next week earnings season continues and we get Gross Domestic Product (GDP) on Thursday, followed by the Core Personal Consumption Expenditures (PCE) inflation number on Friday. For TSP TIPS all three equity funds (C/S/I) are also tracking to have their 20MA cross BELOW their 50 MA this week. It should be noted that this unwinds the C/S/I action between 20 and 24 November 2023, when all three funds had their 20MA cross ABOVE their 50 MA. As such, we are recommending the following new investment mix.
The S&P 500 had its worst week since March 2023, down just over 3% and closing Friday at 4967. We usually look at daily market action, but the recurring theme this week was the S&P 500 now having six consecutive down days. On Friday the Fed released their latest semiannual Financial Stability Report, which provides 1) their assessment of the U.S. financial system stability and 2) survey results from 25 financial and academia professionals. Coming in as no surprise, Persistent Inflation and Monetary Tightening remained the highest risk at 72%, the same as last October. However, what was surprising was Policy Uncertainty. Ranked the lowest of the five risks in October with a score of 24%, it jumped into second place with a score of 60%. Factors included uncertainty over trade and foreign policy, escalating geopolitical tensions, and the upcoming November elections. These are two major takeaways, but if you would like more detail, the report is readily available at the Feds website. From a technical perspective, just three Fridays ago (28 March), the S&P 500 made a new record high. After three straight down weeks, the S&P 500 is now just over 5% below that level and closed below that psychological 5,000 level on Friday. The S&P 500 is also below its 20 and 50 day Moving Averages (MAs), and the 20MA is tracking to cross below the 50 MA this week. From a trending perspective, the S&P 500s weekly bar chart again had a lower high and lower low than the previous weeks high and low. And finally, the 10-year Treasury Note yield has increased over the last three weeks, stands at a Year To Date (YTD) high, and at levels not seen since mid-November. Remember that increasing bond yields put pressure on equities. For next week earnings season continues and we get Gross Domestic Product (GDP) on Thursday, followed by the Core Personal Consumption Expenditures (PCE) inflation number on Friday. For TSP TIPS all three equity funds (C/S/I) are also tracking to have their 20MA cross BELOW their 50 MA this week. It should be noted that this unwinds the C/S/I action between 20 and 24 November 2023, when all three funds had their 20MA cross ABOVE their 50 MA. As such, we are recommending the following new investment mix.