U.S. stocks climbed to fresh highs last week, but that was soon overshadowed by President Trump’s announcement on Sunday that tariffs on certain Chinese imports would be increased from 10% to 25% due to prolonged trade negotiations. The stock market fell sharply Sunday night and has opened the week in the red.
As you know, these types of events do not influence our investment decisions. It is foolish to react emotionally because you think that a current event will cause the market to behave a certain way. The fact that prices moved sharply is significant and it will influence our buying and selling decisions should current price trends shift, but it is too early to make that call.
Lowest unemployment in 50 years: The unemployment rate fell to 3.6% in April, which is the best/lowest rate since Dec. 1969. No commentary or opinion on this one. Here is a look at the unemployment trend dating back 70 years…
No interest rate increase: The Federal Reserve left its benchmark lending rate (the “Federal Funds Rate”) unchanged at 2.5%. This is the rate that big banks use when they lend cash to one another. After raising interest rates four times in 2018, there have been no increases to the Fed Funds Rate in 2019. Rate hikes are likely to occur at some point in the future to prevent the economy from overheating, but the Fed has indicated it won’t budge interest rates anytime soon.
In The Market...
The S&P 500 gained +0.2% last week. Let's look under the hood:
As mentioned, the S&P index extended its record highs thanks to a small weekly gain. The S&P rose +4.1% in April, staying a perfect 4-for-4 in terms of its monthly winning streak to begin the year.
Despite the losses to start this new week, our stock market outlook remains neutral-to-positive. However, we are coming up on the Summer months, which tend to be flatter than the October thru March timeframe of the stock market year.
We shuffled some funds around, selling a S&P 500 index fund (SPLG) for a nice gain. We then took a partial position in a more Tech-heavy index fund (SPYG), which we aim to add to in the near future. On the bond side we reduced our Corporate bond fund position (SPLB) and still hold both High-Yield bonds (SHYG) and Treasury bonds (SPTL) for accounts that own bonds.
In Our Portfolios...
What's New With Us?
I am pleased to announce that Josh Baird has been promoted to Investment Adviser Representative! He will assume his new role starting in June and will be tasked with building his client base within our firm. If you happen to communicate with Josh in the coming days make sure to congratulate him on a position well earned.
Have a great week!
Brian E Betz, CFP®