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The week continued with even greater gains Thursday and losses Friday

The major markets closed last week with mixed gains in the Nasdaq, S&P 500 and the MSCI World Index. Meanwhile, the Dow Jones Industrial average and the MSCI Emerging Markets index closed out the week lower. Market Analysts waited with expectation and trepidation ahead of the midweek FOMC meeting. The expectation going into the week was that the Fed would raise the Fed Funds rates by 25 basis points after a year filled with 75 and 50 basis point increases. This placed the Fed Funds Rate at 4.5 to 4.75% and took interest rates to their highest level since the fall of 2007. While these rates feel high relative to the trailing 5 and 10-year averages, this places the Target range right around the historical average of 4.6%, dating back to 1954. The week continued with even greater gains Thursday and losses Friday which bookended the week’s daily sessions. Despite the increase in the Fed Funds Rates, Treasuries remained effectively unchanged from the prior week. The various bond indices also remained fairly stable with the noteworthy gains in the high yield segments. Contact us today to learn more about how we can help you. www.leapwealth.com

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This has been the best start of the year for the Nasdaq since 2001.

The Major Markets resumed their upward trek last week with gains in all five indices. The Nasdaq led the pack higher as it outperformed the other 4 indices by double the weekly returns in some cases. For the Nasdaq, last week’s gains were noteworthy, not just because of the four and a third percentage point gain, but for what that gain as of Friday’s close did. For the first time since January of last year, the Nasdaq managed to close the day above its 200-day moving average. This is viewed as a key technical level for many that utilize technical analysis. Whether the market manages to climb higher off the December lows or resumes the downward fall, time will tell. But for the time being, analysts were celebrating this start of the year as the best beginning for the Nasdaq since 2001. The FOMC will be meeting again this week and the CME Group FedWatch Tool has a 25-basis point increase to the Fed Funds Rate priced as a near certainty. However, the upcoming meetings in March, May, and June look far more uncertain but the consensus is that the Fed is nearing the end of their rate increases for the time being. Wednesday saw initial weakness following Microsoft’s disappointing fiscal Q3 outlook as earnings season caused a number of high-profile companies’ results to play on the greater market’s optimism. At the sector level, only Health Care and Utilities closed lower. The gains were widespread across the 9 other sectors. Not surprisingly, the segments that form the larger components of the Nasdaq saw the greatest gains. Contact us today to learn more about how we can help you www.leapwealth.com

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Communication Services was the standout performer

After two solid weeks of gains, the Major Markets began to experience some choppiness in the new year with the markets closing the week mixed. The greatest losses were in the Dow Jones Average as the fourth quarter earnings results for Goldman Sachs and the forecast for Travelers Insurance weighed heavily on the index. Conversely, Netflix’s positive earnings results coupled with the stepping down of its CEO saw the stock as well as the larger communication services sector climb higher after hours Thursday. This gave the S&P 500 a much needed boost at the end of the week which helped the index to recover much of the earlier losses. Communication Services was the standout performer of the various segments of the S&P 500 last week. Energy and Information Technology also managed to close positive at the end of the 4 daily sessions. Meanwhile, losses in Industrials, Utilities, Consumer Staples, and Financials weighed the heaviest on the broader index. The economic calendar held several reports that pointed to a cooling economy and gave investors optimism that inflation was continuing to subside. The Produce Price Index came in lower than expected with a month over month decline of 0.5%, marking the biggest monthly decline since April 2020. Retail Sales also came in lower than expectations as the ongoing impact of inflation was causing sales to drop, slowing consumer’s spending. Analysts highlighted that rising credit card balances and interest rates as well as rising auto loan rates were impacting demand. Contact us today to learn more about how we can help you. www.leapwealth.com

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The strength of the new year continued into the first full week of 2023

The strength of the new year continued into the first full week of 2023. The gains were the greatest in the Nasdaq but closely followed by the Emerging Market Index. While the Santa Clause rally was nowhere to be seen in December, the weekly performance has been progressively improving relative to the week ending December 9th. On Thursday, the Consumer Price Index reflected a year-over-year increase of 6.5% and was largely in line with expectations and cooler than recent months. This was also the case while the weekly jobless claims report which showed a reduction in the continuing jobless claims and a lower reading of the initial claims. However, on Friday, Treasury Secretary Janet Yellen wrote in a letter to Congress that the debt ceiling would hit this Thursday. The last time the government had approached the debt ceiling, congress increased the debt limit to approximately $31 trillion back in December of 2021. This presents a challenge for both congress and the markets as the Federal Reserve is trying to rein in inflation while the Treasury needs to further kick the proverbial can down the road, all at a time when congress is highly divided. Nevertheless, the markets seemed to shrug off this news initially as only Monday saw a negative daily session last week. This week will see earnings season begin to ramp up as the fourth quarter 2022 numbers will begin to hit the street and talk in Washington will begin to focus more on the debt ceiling. Contact us today to learn more about how we can help you www.leapwealth.com

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The Major Markets started the year off with green in all five of indices

The Major Markets started the year off with green in all five of indices. For the S&P 500, the new trading year began with a minor back and forth on Tuesday and Wednesday. Right off the bat, the market had an opportunity to reassess the FOMC’s plans for the new year with the Wednesday release of December’s FOMC Minutes. In the document the minutes highlighted the pains that the Fed is feeling around market participants that have begun to expect some sort of accommodation by the Fed, reading: “Participants noted that, because monetary policy worked importantly through financial markets, an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the Committee’s reaction function, would complicate the Committee’s effort to restore price stability.” These minutes came out the same day as the ATP employment report reflected an additional 235,000 new jobs created for December, exceeding the 153,000 expected. The market sold off following these results Thursday ahead of the Friday release of the December BLS Employment Report. In a goldilocks fashion, the employment numbers came out positive, but not too positive relative to expectations nor too significant a miss. The 223,000 new jobs headline was close enough to expectation that market participants bid up the markets to see a daily gain exceeding 2 percentage points. Finally, the week ended with some steepening of the yield curve, as the curve continued to invert with the 6-month yield closing at 4.79% while the 10-year fell to 3.55%. Contact us today to learn more about how we can help you www.leapwealth.com

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For the year the Nasdaq fell just over 33%

The Major Markets closed out the year with another week mostly filled with red. The conclusion of December firmly placed the year in the negative column for most indices common within a traditional diversified asset allocation portfolio. This short summary will tie up a year many will likely want to forget. For the year the Nasdaq fell just over 33% followed by the MSCI World Index and S&P 500 which both narrowly avoided a 20-percentage point loss. The Dow Jones Industrial Average faired the best with a loss that ended in single digits. For the S&P 500, the loss stands as the largest loss since 2008’s decline of 38.5%. For investors that haven’t experienced much in the way of a bear market, last year’s decline may feel unprecedented. However, going back to 1928, 30 of the last 93 years, the market closed lower with the average loss being 15%. At the sector level, Energy was the only sector that closed higher. The impact of the losses within the NASDAQ can be more easily seen within the sectors of Communication services, Consumer Discretionary, and Information Technology as companies that have thrived in the prior years growth market finally were forced to face headwinds in this bear market. Value was a better theme this year as that side of the style box saw shallower losses compared to Growth with the best of the worst residing within Large Cap Value. Bonds which can be easily mistaken for a simple buffer from market losses ended the year firmly negative. In fact, the losses in the bond market largely kept pace with equities to the downside. Treasuries closed out the year inverted despite a minor increase in the longer end of the yield curve. The shape of the curve at the end of 2022 nearly mirrors the shape of the curve at the end of 2021. This places interests in a delicate position. At Leap Wealth, we are here to help our clients manage through all the highs and lows. Contact us today to learn more. Happy New Year!