"Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence."
- Helen Keller
Valued Client,
We hope this message finds you well. It has been an eventful three years from the start of COVID shutdowns in 2020 to the FED raising interest rates in 2022 and 2023. As we enter the second half of 2023 and continue to navigate the dynamic landscape of the financial markets through 2024, we would like to provide you with an update on the current state of the stock market and the broader economic environment.
The stock market has continued to exhibit strength and resilience, with major indices continuing to show an upside bias. Technology shares have led the way after having an unfavorable year in 2022.
Inflationary pressures in recent months have subsided but continue to be a prominent concern in the financial markets. With consumer prices increasing by less than 3% (year over year) in June 2023 for the first time since April 2021. Fewer S&P 500 companies than normal are commenting on inflation during their earnings conference calls for the second quarter? (Factset)
The US economy grew a more than expected 2.4% during the second quarter of 2023 compared to the first quarter and on a seasonally adjusted basis, according to the first advance release from the Bureau of Economic Analysis. Factset expectations were for the economy to have grown by 1.5% during the quarter. GDP is projected to rise by 1.5% in 2023 and .9% in 2024. FACTSET. I look for these numbers to come in higher than projections.
Many investors continue to bet that we are going to have tougher economic conditions. This number is reflected in the amount of short interest on the S&P 500. It stands at 14.4%. The average short interest in the S&P 500 is 2.25% according to the latest S&P Global Markets Intelligence data from March 8, 2023. This should provide an upside bias into the end of year.
Earnings outlook- As of the current available data, the S&P 500 companies are displaying a positive earnings trajectory for 2023. Corporate earnings have shown resilience despite challenges, including global economic fluctuations and geopolitical uncertainties. This robust performance is largely attributed to strong consumer spending, continued technological advancements, and the revival of various industries post the pandemic.
I believe we are still in a Secular Bull Market with many years left in its path. If that changes, we will adjust. As I’ve emphasized in our prior conversations, stocks are in a long -term upward trend, and that upward trend is incorporated into your financial plan, but stocks don’t rise in a straight line. Be prepared for setbacks and use those as opportunities to add to equities when appropriate.
As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor. I’m here to assist you and to answer any questions you might have in regards to financial planning, the markets or walk through any issue that concerns you. As always, thank you for the relationship and trust.
Harry S. Williamson, WMS
First Vice President, Investments
Financial Advisor
Any opinions are those of Harry Williamson and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S .stock market.
Prior to making an investment decision, please consult with your financial advisor about your individual situation.
