Weekly Investment Update: February 13, 2023

Feb 13, 2023 | Investment Updates, Weekly Investment Updates


Key Events: The Fed throws cold water on ‘the pivot 

Several Federal Reserve members spoke publicly, with a similar message – despite slowing inflation, there are more interest rate hikes to come. [1]

The future is murkier; a softening economy forewarns the recession that is now a Wall Street consensus expectation.  Most companies have reported 4Q earnings reports and, as expected, profits continue to decline. [2]

Market Review: The pause that refreshes?

Large cap stocks held in better than most markets this week. The S&P 500 declined 1.1% while small-cap (-3.3%) international (1.6%) and emerging markets (-2.4%) all lagged. Year-To-Date returns remain positive, and positive market technicals remain in place. 

Outlook: The pause that refreshes faces off against the economic data.

We expect volatility to continue while two competing narratives vie for acceptance.   

One narrative says the economy is slowing, evidenced by slowing earnings and contracting manufacturing surveys;  the stock market is likely to fall. 

Another narrative says the market remains focused on the long term. The evidenced supporting this narrative includes strong market breadth and movements that have taken stocks above both long-term averages and the downtrends of 2022 Another set of data in the ‘long-term’ camp is continued strength of the consumer; this week we note Valentine’s spending is forecast to increase 8% in 2023,[3]; the chart below illustrates the breakout of that spending

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Past performance may not be representative of future results.  All investments are subject to loss.  Forecasts regarding the market or economy are subject to a wide range of possible outcomes.  The views presented in this market update may prove to be inaccurate for a variety of factors.  These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data.  Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.