Assurance Wealth Management

Weekly Economic Update for June 21, 2021

In this week’s recap: The Feds signals interest rate hikes.

Weekly Economic Update

June 21, 2021

THE WEEK ON WALL STREET

New messaging from the Federal Reserve on interest rates and inflation last week led to a broad retreat in stock prices.

The Dow Jones Industrial Average dropped 3.45% while the Standard & Poor’s 500 lost 1.91%. The Nasdaq Composite index slipped 0.28% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.64%.1,2,3

UNSETTLED MARKETS

The Federal Reserve’s announcement on Wednesday that interest rate hikes may likely occur sooner than expected and that it had underestimated the pace of inflation unsettled investors. The hardest hit groups were cyclical stocks, like energy, materials, and industrials, as well as financials and consumer staples.4

Losses accelerated into the week’s close on comments by St. Louis Fed President James Bullard that the first rate hike could be as soon as 2022. 

The bond yield curve flattened, as short-term interest rates rose in anticipation of rising rates and longer-term rates declined, reflecting a view of an eventual economic slowdown. 

THE FED'S SURPRISE

Last week’s FOMC meeting announcement took investors by surprise as the Fed indicated that two rate hikes in 2023 were likely. It was as recent as March that the Fed had signaled that rates would remain unchanged until 2024.4

The Fed also raised its inflation expectations to 3.4%, up from its March projection of 2.4%, though it continues to believe that price increases will be transitory in nature.5

The Fed provided no indication of when and by how much it might begin tapering its monthly bond purchase program.6

TIP OF THE WEEK

You likely have multiple credit cards. Arrange them so that the one with the lowest interest rate is the easiest to reach for in your handbag or wallet.

The WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Existing Home Sales.
Wednesday: PMI (Purchasing Managers Index) Composite Flash. New Home Sales.
Thursday: GDP (Gross Domestic Product). Durable Goods Orders. Jobless Claims.
Friday: Consumer Sentiment.

Source: Econoday, June 18, 2021

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Wednesday: KB Home (KBH).
Thursday: FedEx Corporation (FDX).
Friday: Carmax, Inc. (KMX).

Source: Zacks, June 18, 2021

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

QUOTE OF THE WEEK

“Done is better than perfect.”

SHERYL SANDBERG

THE WEEKLY RIDDLE

Before Mt. Everest was measured, in 1819, what was the highest mountain on earth?

LAST WEEK’S RIDDLE: What common English word has three consecutive double letters?
ANSWER: Bookkeeper.

All written content on this site is for information purposes only. Opinions expressed herein are solely those of Assurance Wealth Management and our editorial staff. The information contained in this material has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. All information and ideas should be discussed in detail with your individual adviser prior to implementation. Advisory services are offered by Assurance Wealth Management a Registered Investment Advisor in the State of Texas. 

Assurance Wealth Management is not affiliated with or endorsed by the Social Security Administration or any other government agency.

The presence of this website shall in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Texas or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.

Images and photographs are included for the sole purpose of visually enhancing the website. None of them are photographs of current or former Clients. They should not be construed as an endorsement or testimonial from any of the persons in the photograph.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalization in the FTSE Developed Europe Index. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. Established in January 1980, the All Ordinaries is the oldest index of shares in Australia. It is made up of the share prices for 500 of the largest companies listed on the Australian Securities Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The FTSE TWSE Taiwan 50 Index is a capitalization-weighted index of stocks comprising 50 companies listed on the Taiwan Stock Exchange developed by Taiwan Stock Exchange in collaboration with FTSE. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The U.S. Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

  1. The Wall Street Journal, May 31, 2021
  2. FactSet.com, May 21. 2021
  3. FactSet.com, May 21, 2021. The estimated, or blended, figure combines actual results for companies that have reported and estimated results for companies that have yet to report.
  4. CNBC.com, May 12, 2021
  5. CNBC.com, May 13, 2021
  6. Sectorspdr.com, May 31, 2021
  7. CNBC.com, April 28, 2021
  8. MSCI.com, May 31, 2021
  9. MSCI.com, May 31, 2021
  10. MSCI.com, May 31, 2021
  11. BEA.gov, May 27, 2021
  12. The Wall Street Journal, May 7, 20201
  13. The Wall Street Journal, May 14, 2021
  14. MarketWatch, May 14, 2021
  15. CNBC.com, May 18, 2021
  16. CNBC.com, May 21, 2021
  17. Reuters.com, May 27, 2021
  18. The Wall Street Journal, May 13, 2021
  19. FoxBusiness.com, May 27, 2021
  20. CNBC.com, May 19, 2021
  21. FederalReserve.gov, May 19, 2021

Leave a Reply