The week began with a modest Monday gain until the Consumer Price Index report came out on Tuesday– showing inflation still rampant and rising and not at all under control.
Retail investors immediately panicked again, fearing more massive interest rate increases to come in response, leading to economic Armageddon. The resultant selling led to the fifth week of price declines in the last 6 weeks and Tuesday was the fifth largest single-day decline for the S&P500 Index in history.
Analytics, however, indicate institutional investors are not among the sellers – their continue to hold their positions, so we do too, though suffering like them as our profits contract and many positions tip from gain to loss. Despite numerous declines among our stocks, no exit or short trades were signaled for next week.
The fact that institutions were not selling suggests there may be another rally next week if they take advantage of even lower prices than 3 weeks ago to buy stocks at deep discount.
Another forgettable, turmoil-driven week, becoming rather common under this administration – under which S&P500 investors have a YTD loss of -18% and Nasdaq Composite investors have a YTD loss of -25%. Add the fact mortgage rates are now 6.28% (they were 2.65% in early 2021) and inflation is now 8.3% (was 1.4% in early 2021) and the combined effect is 2022 2Q saw the largest decline in U.S. household net worth in history, per Reuters, nearly double that of any quarterly loss in 2008.
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