Confluence Of Events Sees Equities Decline
- Scott Poore
- Jun 29
- 2 min read
Equity rebalancing, tech weakness, and deleveraging moved markets last week. Large pension funds & sovereign wealth funds were been forced to rebalance into quarter-
end due to the rise in equities over since the end of the first quarter. J.P. Morgan estimates up $165 billion in equity selling occurred last week.1 Early last week, semiconductor stocks took a hit as deleveraging started in South Korea on the Kospi, triggering a circuit breaker for the second time this month. As a whole, tech stocks were down more than 5% last week.2 This follows with the seasonal swoon we typically see in equities in the latter half of June.
There may be some good news for investors on the inflation front. The Fed has shifted their projections for inflation for the month of June from slightly positive to negative.
The Cleveland Fed had initially projected June CPI (Consumer Price Index) to come in slightly positive, but have recently revised it to -0.02%.3 If this is accurate, it would also bring the year-over-year reading to 3.96% - a drop from May's reading of +4.2%. Oil declined another 9% last week, bringing the total decline since the April peak to more than -38%.4 The price of gas at the pump has followed suit, down more than -17% since the May peak.5 If the situation holds or continues to improve, it would provide some needed relief for consumers.
More potential good news on the horizon for investors is the historical performance for the month of July. For equities, July is he best month of the year over the past 20 years.6
During Mid-term election years, July has proved the 3rd best month for equities. The economic backdrop supports this as the labor market has proved resilient, credit spreads are stable, and market volatility is hovering around historical norms. Investors who stay committed to their long-term financial plans are likely to be rewarded.
Disclosures
The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.
Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
Past Performance does not guarantee future results.
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