"Buying the Dip" Investors Show Up

Weekly Market Commentary -5/27/2022

Happy Memorial Day, and thank you to all that have served our great country.

Global financial markets rallied as buy the dip investors finally showed up on Wall Street. US Markets were especially strong after losing for seven consecutive weeks. Market sentiment is quite negative, and the market was very oversold, which created a ripe environment for a bounce. Q1 earnings continued to come in mixed as management teams tempered expectations for the coming quarter and full year on continued concerns regarding the supply chain disruptions and higher inflation. However, this week we saw initial sell-offs in earnings news from some prominent names reverse to sizeable gains; NVidia and Dicks Sporting Goods are two examples, perhaps another indicator of an intermediate low. An ease in Covid lockdown measures in China also buoyed markets on the notion that the supply chain could now start to normalize. Economic data showed a slowdown in housing, a slight pullback in inflation, and deteriorating consumer sentiment.

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The S&P 500 gained 6.6%, the Dow rose 6.2%, the NASDAQ outperformed with a 6.8% advance, and the Russell 2000 was higher by 6.5%. The yield curve steepened as Treasuries inked the third week of gains. The 2-10 spread widened week-over-week to 28 basis points from 21 basis points. The 2-year yield fell twelve basis points to 2.46%, while the 10-year yield declined by five basis points to 2.74%. FOMC minutes released on Wednesday showed that the Fed is inclined to increase rates at the next two meetings by 50 basis points and showed no real support for a 75 basis point move. The minutes were as expected but seemed to provide the market with some solid footing concerning the policy rate. The lower move in yields also curbed the US Dollar's appetite, which fell against the Yen, Euro, and British Sterling for a second week. Gold prices increased by $11 and closed at $1851.40 an Oz. Oil prices rose 4.2% or $4.70 to close at $114.75. The move in oil helped propel the energy sector higher by over 8% for the week.

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Darren Leavitt, CFA

Chief Investment Strategist

With over 20 years of experience in the market, Darren bring a diverse background with multiple areas of expertise. Throughout his career, Darren had held a variety of senior positions including Chief Investment Officer, Chief Financial Officer, Portfolio Manager, Senior Analyst, Senior Trader, and Financial Advisor.

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