CWS Market Review – June 17, 2022
“From the perspective of today, either a 50-basis-point or a 75-basis-point increase seems most likely at our next meeting.” – Jerome Powell
I warned investors not to be lured in by a bear-market rally. In just a few days, the latest rally got completely wiped out.
This week, the Federal Reserve unleashed its largest rake hike in a generation, and the stock market continued to plunge. The last several days have been particularly painful.
In the last six sessions, the S&P 500 has lost 10.9%. On Thursday, the index reached its lowest close since December 21, 2020. To give you some perspective, the S&P 500 is now 23.55% below its all-time closing high. This drop is larger than the 1987 crash. The difference, of course, is that 1987 was one day. This time, it’s stretched out over half a year.
The falloff in the Nasdaq is even steeper than the Covid crash in 2020. That index is now off by 33.7%. Simply put: every three dollars invested in Nasdaq stocks in November are two dollars today. It will have to gain more than 50% to break even. Yikes! We’re watching a full-scale rout.
Confused? Scared? Don’t worry. With our strategy, we’re well-prepared for lousy markets. Yes, we’re down, but not nearly as much. In this week’s issue, I’ll go over the Fed’s latest move and what it means for us. I’ll also explain why we should expect more rate hikes this year.
Later on, I’ll preview next week’s earnings report from FactSet. This is a company that’s increased its earnings every year for the last 25 years, and it looks to do so again (no matter what the Fed does). I’ll also share two of our Buy List stocks that are going for especially compelling valuations. But first, let’s look at this hot mess of a market.