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Jerome Powell announced the 75-basis point increase

The final week of July closed out the month with gains across all five of the major markets. The Nasdaq returned to the top spot for the second week in a row with the S&P 500 not far behind. For the S&P 500, last week’s gains added to an already significant monthly return. In fact, the S&P 500 logged its best monthly return since November of 2020. During the flurry of earnings announcements, the FOMC held their summer session. On Wednesday, Fed Chairman Jerome Powell held the post conference press committee in which he announced the 75-basis point increase and gave further guidance on the plans for the committee. Activity in the housing sector has weakened, in part reflecting higher mortgage rates. At the beginning of the conference, Powell continued to highlight the challenge of the current 9.1% inflation rate. Powell was careful not to say the word “recession” until asked of him by one of the reporters in attendance. The Biden administration had come under pressure within the last week with its publication of a memo that provided a definition to the term “recession” beyond the short-hand designation of two consecutive negative quarters of GDP. Rather, they redirected people to the National Bureau of Economic Research which holds a more ambiguous classification of what defines a recessionary period. While the Administration is accurate to say that the definition of a recession hasn’t truly changed, two consecutive quarters of negative GDP has long stood as that used by the everyman and oft repeated by economists. The CME Group’s FedWatch tool still places the greatest probability of a 50-basis point increase at the next mid-September meeting with a greater probability of additional 25-point increases in November and December. At Leap Wealth, we are here to help you manage through the economic and political noise to stay on track. Contact us today to learn more.

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Federal Reserve raised rates 75 basis points

The Major Markets saw green last week as the markets continued their climb back from the June lows. After touching the low 3600 level in Mid-June, the S&P 500 managed to trade back above 4000 for the first time in just over a month, giving investors some hope that relief was returning to the markets. The gains were fairly consistent as eight of the 11 sectors closed higher with Consumer Discretionary adding an impressive 6.79% return for the week. Health Care, Utilities and Communication Services were the lone holdouts in negative territory as Earnings season began to have a negative impact to select segments of the market. For example, AT&T. Last week’s economic calendar did hold some troubling results. The week began with the NAHB Home Builder’s Index. The drop of 12 points in the index serves as the largest monthly drop, excluding the April 2020 reading in the midst of Covid. This week, the FOMC will meet to hold their next Fed Meeting with an additional 75 basis point increase to the Fed Funds rate widely expected. Yet, the concerns of a recession will also be present. Contact us today to learn more about how we can help you. www.leapwealth.com

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Inflation has raised to 9.1%

The Major Markets experienced another week of volatility as all five indices ended lower. Emerging Markets saw the greatest pullback as it shed 3 and 3/4 percentage points. The Dow was the best of the worst as it managed to close effectively flat for the week. For the S&P 500, the week began with weakness on Monday and continued to see progressively reduced losses with each day until Friday’s nearly two percentage point return helped to offset the earlier losses. Market analysts were geared up for the release of the Consumer Price Index Wednesday. The anticipation was for a slightly worse 8.8% year-over-year increase in the headline inflation number. On Tuesday, a fake leak of the June Consumer Price Index report showed a 10.2% increase, which spread throughout the various financial news outlets and sent trepidation through the equity markets. This prompted the BLS to refute the false leak, reminding that the official release would hit at 8:30 AM the following morning. The actual 9.1% reading was somewhat cushioned by the prior day’s speculation, yet still saw a lower close for the S&P 500. Looking ahead, market analysts will be watching the Earnings calendar for signs of economic health as recession concerns linger in the background of the economic reports. Contact us today to learn more about how we can help you. www.leapwealth.com

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Oil saw a drop back below $100 a barrel

The Major Markets started the second half of 2022 with gains in all five of the indices. The Nasdaq took the focus as the tech stocks continued the gains from the prior Friday. Emerging Markets followed by the Dow both eked out a holiday shortened weekly gain of just under a percentage point. The returns were more varied at the sector level. Digging deeper, we see that the S&P 500’s gains were generated by a minority of segments. Communication Services, Consumer Discretionary, and Information Technology carried the greater index, following the theme of the Nasdaq’s outperformance as the first and third segments represent some of the largest portions of the Nasdaq. Meanwhile, the other six sectors fell short for the week with Utilities and Energy seeing the greatest pullbacks. Energy continues to be an interesting segment of the market this year as there were losses in oil while Natural Gas saw gains. While both forms of energy have fallen from their recent highs, they took different paths to get here. Last week, Oil saw a drop back below $100 a barrel for the first time since April as recessionary concerns continued to mount. While prices have been elevated as recently as mid-June, the commodity hadn’t traded as high as it did in March when prices exceeded $130 a barrel. This couldn’t be said about Natural Gas, specifically Liquid Natural Gas, as the commodity hit the year-to-date high in early June. This was largely due to geopolitical concerns of supply to Europe compounded with an explosion at a processing plant in Texas that limited the supply to Europe, and at least temporarily caused a glut stateside. Contact us today to learn more about how we can help you. www.leapwealth.com

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Last week marked the end of the first half of 2022

Last week marked the end of the first half of 2022. To say that this year has been rough for the markets is an understatement. By Thursday’s close, all five of the Major Markets sat with a 15% or greater loss to start the year. For the S&P 500, the -20.58% loss stands as the worst first half of the year since 1970 and the third greatest going back to its creation in 1957. Many investors have questioned what this means for the markets. Since 1958, there has been 43 years (67%) with a positive first half and 45 years (70%) of a positive second half. When the first half of the year has been negative, there was still a greater than not chance that the second half of the year would be positive. That said, the average return for the second half drops from 4.58% to only 2.09%. Moreover, the annual returns only manage to become positive 38% of the time. There is still some optimism for analysts though as the prior two years that the S&P 500 began the year worse than 2022, both managed to see double-digit gains in the second half. Nevertheless, every year is different and the future is still very uncertain. In economic news, the Atlanta Fed updated their GDP Now forecast tool from a loss of 1% in the second quarter to reflect a recessionary loss of 2.1 percent. Consequently, the CME Group’s Fed Watch Tool revised their assessments of future rate increases to reflect the changing dynamics. While the CME Group still largely anticipates another 75-basis point increase at the July FOMC Meeting as well as a high likelihood of a subsequent 50-basis point increase at the September meeting, the higher probability targets for the remainder of the 2022 meetings see a 25-basis point increase into the December meeting. That said, analysts are already anticipating a reduction in interest rates in 2023 as a probability of a recession more fully plays out. At Leap Wealth, we are here to guide our clients through all the markets' turmoil, both short and long term. Contact us today to learn more about how we can help you. www.leapwealth.com

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The Major Markets saw a significant bounce last week as all five indices closed higher.

The Major Markets saw a significant bounce last week as all five indices closed higher. For the first time in a while, the Nasdaq was once again the best performer of the indices with an impressive 7.5% weekly gain. However, as large as the weekly returns were, the year-to-date losses going into the final week of the first half of the year still loom over the economy. The recovery in the major markets were not limited to just a handful of indices. The gains were widespread as they were significant. Across the style box, the roughly 6.5% gain for the S&P 500 was the second largest return. Large Cap Growth added even more as it came in with an impressive 7.87% for the week. The weakest performer was Small Cap Value, which even it managed to add 4.5%. The few economic reports that were released last week did little to significantly change the overall perspective of the market. Tuesday’s existing-home sales came in at expectations with an annualized reading of 5.41 million, down 8.6% year-over-year, and standing as the fourth consecutive monthly decline in sales while mortgage rates have risen. Reach out to us if you have any questions. Have a great 4th of July!