Market Insight May 8, 2023

Here is the Market Insight for the week of May 8, 2023:

Fed Continued To Raise Rates

What is it?

Last Wednesday the Fed raised the prime interest rate another 0.25%.*

“‘The Fed has raised interest rates at the fastest pace in 40 years and fallout is to be expected. Bank failures are one, but a broader economic slowdown or recession is likely the ultimate price to be paid to get inflation under control.’ says Greg McBride, CFA, Bankrate chief financial analyst.”

Why does it matter?

After the meeting, Federal reserve chair Jerome Powell made one important point. He mentioned they do not plan on increasing interest rates more, but may still do so depending on incoming data. Last month they came into May with the intention of continuing to raise interest rates. That change in the language used to discuss the next meeting was enough to keep investors from selling off stocks. 

With that said, another bank suffered not long after. Other banks suffered as a result and fear crept back into the markets last week with more down days than up.  

Apple Saved the Day

What is it?

The week in stocks wasn’t great but Apple’s earnings helped to boost investor confidence on Friday. 

“Apple Inc. rallied Friday after an iPhone rebound helped quarterly earnings beat estimates, even as overall sales at the world’s most valuable company remain in decline.”**

Why does it matter?

While the iPhone did well, almost all other products did worse than expected last quarter. The strong U.S. Dollar hurt profits from international sales. This is important for other companies as much as it is for Apple. If Apple is having a hard time in some areas, then smaller companies may have to weather the economic storm or find ways to innovate. 

Other articles we found interesting this week:

Yellen is calling CEOs personally to warn on US debt ceiling, sources say

April job reports shocks with 253,000 jobs created, unemployment falls

Chicago Fed’s Goolsbee: ‘Credit squeeze is beginning’

Current 401(k) portfolio

Our last 401(k) portfolio reallocation: 5/19/2022. 

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The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach. 

Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.

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Sources:

*James Royal. “Biggest winners and losers from the Fed’s interest rate hike”. 5/3/2023. Bankrate. https://www.bankrate.com/banking/federal-reserve/fed-interest-rate-decision-biggest-winners/

**Mark Gurman. “Apple Buoys Wall Street, Keeping Doubts on Future Growth at Bay”. 5/5/2023. Yahoo Finance. https://finance.yahoo.com/news/apple-iphone-bounces-back-helping-224910213.html

IMPORTANT DISCLOSURES: 

Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation. 

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Craig Stahlecker

Craig Stahlecker

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IMPORTANT DISCLOSURES:
The information provided is intended to be educational in nature and is not intended to be a recommendation for any specific business or tax strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation of services.

Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any business or tax planning decisions, an individual should seek individualized advice from a personal financial, tax, legal, or business consultant professional that takes into account all of the particular facts and circumstances of an individual’s own situation. No person associated with Breakaway Financial Group LLC is a licensed attorney, and the information contained herein should not be considered legal advice.