Weekly Market Commentary – 6/24/2022

-Darren Leavitt, CFA

In a holiday-shortened week, financial markets bounced out of extreme oversold conditions.  Mega-cap growth stocks outperformed value issues, mid-caps, and small caps.  The Fed Chairman was on the hill in front of the Senate Banking Committee for his semiannual testimony in front of the Senate Banking Committee.  J Powell offered up what most expected, a stern position to combat inflation and o the realization that it would be difficult to avoid a hard landing.  Most of what was said was already priced into the market.  A rebound in the market also comes as a quarter-end and semiannual end approach.  Many institutional investors are likely to rebalance their models due to the enormous moves we have seen in certain parts of the market.

The recent sell-off in energy issues that coincide with the nice movements we saw this week in infotech and consumer discretionary may be evidence of this rebalance.  Economic data for the week was mixed.  A surprisingly strong May New home sales helped extend the rally on Friday, while global PMI data generally was weaker than the prior month’s data.  The final reading of the University of Michigan’s Consumer Sentiment indicator fell to 50, well below last year’s reading, which came in at 85.5.  The sentiment is at the lowest level since 1978.

The S&P 500 gained 6.4% and closed above 3900.  The Dow got back 5.4%, the NASDAQ was up 7.5%, and the Russell 2000 added 5.8%.  The Treasury market rallied across the curve in volatile trade. Growth concerns sent the 2-year note yield to 2.90% before settling down twelve basis points to 3.06%.  The 10-year yield fell eleven basis points to 3.13%. Oil prices were also quite volatile, falling at one point by nearly 7% only to recover to a fractional loss.  WTI closed at $101.53 a barrel.  Copper prices fell below $4 an lb, losing 9.2% to $3.74 an lb. Bitcoin found some footing after a brutal month.  As I write, the cryptocurrency is higher by ~$2000 from the prior week.

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