Week Ending May 13 Financial Markets Update

The S&P 500 Index declined nearly 2.5% for the week although a strong Friday session helped mitigate the pain. Growth stocks continued to pull the market down as inflation and the Fed’s anticipated response are at the top of investor’s minds. Growth has underperformed value by over 17% year to date in one of the greatest selloffs in high-valuation stocks since the Dot-Com Crisis. The tech-heavy Nasdaq 100 Index came close to eclipsing its maximum drawdown experienced during the Covid-19 pandemic on Thursday. Compared to the current selloff, growth stocks have only experienced equivalent drawdowns three times in the previous three decades; the Dot Com Bubble, the Global Financial Crisis of 2008, and the Covid-19 pandemic. The most significant economic report of the week was the April CPI number which surprised to the upside but showed a slight decrease in inflation from the previous month. 

Federal Reserve Chairman Jerome Powell has had a tumultuous first term as the Board first faced Pandemic influenced economic conditions and now historically high rates of inflation. On Thursday of last week, he received a welcome bit of good news as he was confirmed 80-19 by Senate vote to another term as Chairman for the Federal Reserve. President Biden praised the vote declaring that “tackling inflation” is his “top domestic priority” and noting that the Federal Reserve has a primary role in managing inflation. 
The interpretations and organizations of these ideas are the confidential thoughts of 1st & Main Investment Advisors and do not represent the opinions of BFCFSDifferent types of investments involve varying degrees of risk including market fluctuation and possible loss of principal value. There can be no assurance that any specific investment strategy will be profitable. *some content provided by First Trust Portfolios L.P.  Member SIPC and FINR

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