-Darren Leavitt, CFA

US financial markets were able to log another set of all-time highs as investors cheered a weaker-than-anticipated Consumer Price Index report that signaled more progress on the inflation front.  The US Treasury market rallied nicely on the news and sent a bid into parts of the market that have lagged over the year’s first six months of 2024.  Mega Cap stocks took a back seat as the equal-weighted S&P 500 index outperformed alongside a massive upside move in small-caps.

The week started and progressed with more calls from congressional democrats and donors for President Biden to abandon his bid for another term.  The President has pushed back on the calls and insists he will continue running for office.  The uncertain political landscape increased on Saturday night in Pennsylvania when former President Trump was escorted from a rally after it sounded like gunshots were being fired.   The current uncertain political landscape will likely increase market volatility.

Fed Chairman Powell was on Capitol Hill this week, but his testimony in front of the Senate Banking Committee and the House Financial Services Committee yielded very little new information.

The money center banks kicked off earnings season with better-than-expected results. However, with high expectations and decent gains already made in some of these names, investors sold shares after announcing the results.  Pepsi announced disappointing results and offered tepid guidance on concerns over consumer spending.

This week, the S&P 500 added 1%, the Dow increased by 1.6%, the NASDAQ lagged with a 0.3% advance, and the Russell 2000 rocketed 6% higher.  US Treasuries gained ground that favored the short end of the yield curve.  The 2-year yield decreased by fourteen basis points to 4.46%, while the 10-year yield fell by eight basis points to 4.23%.  The lower move in yields came from a weaker-than-anticipated June CPI print that increased the likelihood of a September rate cut to nearly 94% and increased the chances of another rate cut in December.

Oil prices fell by 1.2%, or $1.04, to close at $82.19 a barrel despite further data showing larger-than-expected inventory drawdowns. Gold prices topped $2400, closing at $2420 an Oz.  Copper prices increased by $0.06 to close at $5.493 per Lb.  Bitcoin was able to bounce off its most recent lows and close just north of $57k a coin. Notably, the Bank of Japan finally intervened in the currency market, defending the Yen, and interestingly seemed to coordinate the move after the cooler-than-expected CPI print hit the tape.  The $/Yen cross closed the week at 157.86.  The US Dollar index fell by 0.8% to 104.44.

The economic calendar was again focused on inflation data scheduled to be released in the second half of the week.  As mentioned, the CPI print came in cooler than expected on both the headline reading and the core reading, which excludes food and energy.  Both data sets showed inflation moderating on a year-over-year basis, with the headline print showing an increase of 3% versus 3.3% in May, while the Core reading increased by 3.3% from 3.4% over the same time frame.  Interestingly, the PPI, or Producers Price Index, came in hotter than expected, and the prior month’s data were revised higher.  The PPI came in at 0.2% versus 0.1%, while the Core reading increased by 0.4% versus 0.1%.  On a year-over-year basis, PPI increased by 2.6% in June, up from 2.2% in May.  The Core reading increased by 3% over the last year, up from 2.3% in May.  The hotter-than-anticipated PPI prints hit the market after its release, but investors bought the dip on the increased expectations of a rate cut in September.  Initial Jobless claims fell by 17k to 222k, while Continuing Claims fell by 4k to 1.852M.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

The holiday-shortened week saw the S&P 500 hit its 34^th record high this year. The NASDAQ 100 also eclipsed the 20k mark for the first time.  Traders welcomed weaker-than-expected economic data that fostered the likelihood that the Federal Reserve could begin to cut its policy rate as soon as September.  Central Bank rhetoric over the week was highlighted by a more dovish Fed Chairman, J. Powell, who affirmed that disinflation continues while the labor market appears less tight and economic activity moderates.  June FOMC minutes showed participants inclined to wait for inflation to cool, but the minutes showed officials divided on how much longer to keep rates elevated.  In the coming week, Fed Chairman Powell and Treasury Secretary Yellen will be on Capitol Hill.

A landslide victory for the Labor party in the UK was widely expected as Keir Starmer became the new Prime Minister. While UK policy will likely shift, it will most likely come with an urgent sense of fiscal responsibility.  The second tranche of French elections will close this Sunday.  Marine Le Pen’s National Rally party is expected to gain significant ground, but it is not expected that it will be enough to create a majority, and that notion helped European markets rally last week.  Here in the US, markets continued to digest President Biden’s weak debate against former President Trump and look for clarity around whether Biden would continue his reelection bid.

The S&P 500 advanced 2.2%, the Dow gained 0.7%, the NASDAQ increased by 4.2%, and the Russell 2000 shed 1%. US Treasuries were bid across the curve, but shorter-tenures outperformed. The 2-year yield fell twelve basis points to 4.6%, while the 10-year yield decreased by seven basis points to 4.27%.

Oil prices gained 2% on larger-than-expected inventory draws and continued unrest in the Middle East. WTI closed at $83.23, up $1.70 on the week. Gold prices rose by 2.4%, or $58.20, to close just shy of $2400 an Oz. Copper prices surged 6% to close at $4.65 per Lb.  Bitcoin continued to struggle and had its worst week in over a year.  The cryptocurrency traded below $55k briefly as investors awaited potential sales from coin distributions from the failed crypto exchange Mt. Gox.

The economic calendar this week painted a moderating economy.  The ISM Services figure contracted at the fastest pace in 4 years and fell well short of the consensus estimate.  Services in the US account for over 70% of GDP and has been the main source of economic growth in the US economy. Contraction in the services sector will aid in the argument for rate cuts from the Federal Reserve.  Similarly, the labor appears to be less tight.  Initial claims ticked higher by 4k and has now been elevated over the last several readings- this comes as Continuing Claims ticked higher by 26k to 1858k.  The Employment Situation report showed Non-Farm Payrolls increased by 206k, above the expected 195K, but significantly lower revisions to the prior two readings suggest that the June figures are likely to be revised lower as well.  Private Payrolls increased by 136k, short of the 160k consensus estimate.  The Unemployment rate ticked higher to 4.1% and was above the estimated 4%.  This number seems to have gained more weight in the report given the large revisions in the payroll figures.  Average Hourly earnings increased by 0.3%, in line with expectations.  On a year-over-year basis, earnings grew by 3.9% down from 4.1% in May.  The Average work week remained at 34.3 hours.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

Financial markets finished the 2^nd quarter with a lack of conviction.  Mega-caps led the market over the quarter with a 9.65% gain, while the equally weighted S&P 500 index declined by -2.42%, and the market weight S&P index gained 4.13%.

The final week of the quarter saw Amazon’s market eclipse $2 trillion, even as investors increasingly questioned the Mag Seven’s market leadership.  Micron Technology’s quarterly results beat estimates, but high expectations were not met, and the company’s shares fell sharply on the news.  Consumer-focused Walgreens and Nike disappointed investors with poor results and cautious outlooks.   The Fed’s stress test of 31 banks came back with passing results and induced announcements from many banks that they would increase their dividends and share buy-back programs.

The much anticipated Presidential debate between President Biden and former President Trump left many questioning President Biden’s ability to lead for a second term. The uncertainty of who, if any, might replace him on the democratic ticket and what policy changes it may invoke will undoubtedly impact markets.  A Trump victory will likely do little to remedy the current deficit and likely raise tariffs on most of our trading partners which some suggest will hit long-duration US Treasuries and agitate the inflation outlook.

Fed rhetoric was heard throughout the week.  Bowman indicated that there is still an upside risk to inflation, Fed President Cook expressed that it would be appropriate to cut rates sometime this year, and Bostic said he expects one rate cut by the end of the year.

The S&P 500 and Dow gave back 0.1%, the NASDAQ increased by 0.2%, and the Russell 2000 advanced 1.3%.  Year to date, the S&P 500 is up 14.5%, the Dow is up 3.8%, the NASDAQ is up 18.1, and the Russell 2000 is up 1%.  US Treasuries saw strong demand in the 2, 5, and 7-year auctions.  However, Treasuries lost ground across most of the yield curve.  The 2-year yield decreased by one basis point to 4.72%, while the 10-year yield increased by eight basis points to close the quarter at 4.34%.  Oil prices increased by $0.83 or 1% to $81.53 a barrel. Gold prices increased by $7.70 to $2339.30 an Oz. Copper prices fell by $0.05 to close at $4.39 per Lb.  Continued pressure on Bitcoin saw the cryptocurrency trade below $60k, but the coin recovered slightly, ending the week at $60,909. The US Dollar index increased by ten basis points to close at 105.90, marking the sixth straight week of gains.

The economic calendar showed progress on inflation, but increased concerns about inflation, business conditions, the job market, and incomes showed up in the sentiment indicators released this week.  The Fed’s preferred measure of inflation, the PCE, came in flat month-over-month and increased 2.6% year-over-year, down from 2.7% in April.  The Core reading, which excludes food and energy, increased by 0.1%, in line with expectations, and fell to 2.6% on a year-over-year basis from 2.8% in April.  Personal Income increased by 0.5% in May, while Personal Spending rose by 0.2%, lower than the anticipated 0.4%. The combination of moderating inflation while incomes rose and spending increased by less than expected supported the narrative that the Fed is making progress and may be able to cut rates before year-end.  That said, concerns continue to brew over the labor market.  Initial claims fell by 6k last week to 233K, but Continuing claims rose by 18k to 1.839M, the highest level since November 2021. New Home Sales remain weak, coming in at 611k units versus an expected 660k.  The University of Michigan’s final June reading of the Consumer Sentiment index was 68.2 versus the expected 65.6.  However, the Consumer Confidence Index was 100.4, below the expected 101.5 level.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

The holiday-shortened week saw the S&P 500 eclipse 5500 and hit its 31^st all-time high of the year.  Volumes were relatively light until Friday, when $5.5 trillion in derivatives expired and rolled in the next contract month.  Several investment banks increased their year-end price targets for the S&P 500 even as hedge funds moved to a more cautious stance.  Narrowing market breadth was also notable this week, as were lackluster results from about 21 billion in corporate bond sales.  However, a 20-year US Treasury auction saw strong demand.  Central bank policy and rhetoric came throughout the week.  The BOE left its policy rate unchanged but signaled a cut in August.  The Swiss National Bank surprised the street with a 25 basis point cut.  NVidia’s market cap surpassed Microsoft’s but regressed on volatile trade in the second half of the week.  Investors will pay attention to end-of-the-quarter rebalancing as they look to the second half of the year.  We expect an uptick of volatility as investors recalibrate expectations for global monetary policy and corporate earnings while assessing the ramifications of this year’s Presidential election.

The S&P 500 gained 0.8%, the Dow outperformed with a 1.5% advance, the NASDAQ added 0.2%, and the Russell 2000 rose 0.7%.  Notably, the Bloomberg Aggregate Bond Index is now flat for the year.  US Treasuries came off a bit this week.  The 2-year yield increased by five basis points to 4.73%, while the 10-year yield rose by five basis points to close at 4.26%.  The US Dollar index traded 0.3% higher.  The Dollar/Yen cross closed the week at 159.53 as the Euro/Dollar cross fell to 1.0695.  Oil prices gained $2.63 to close at $80.70 a barrel.  Gold prices fell by $18 to $2331.60 an Oz.  Copper prices fell by $0.06 to $4.44 per Lb.  Of note, Bitcoin was sold over the week to close at $64,250.

The economic calendar was quite busy.  May retail sales were weaker than anticipated and the prior month’s data was revised lower.  The headline number was 0.1% versus the expectation of 0.3%.  The Ex-autos figure came in at -0.1% versus the estimate of 0.2%.  Housing data showed continued weakness.  Housing Starts came in at 1277k versus the consensus estimate of 1375k.  Building Permits came in at 1386k, while the street was looking for 1445k.  May Existing Home Sales came in at 4.11m, just shy of the 4.14m expected.  Global Manufacturing PMIs generally were weaker than expected, especially in Europe.  However, US Manufacturing data was stronger than expected, and services showed the fastest pace of expansion in 2 years. Initial claims fell by 5k to 238k, while Continuing claims increased by 15k to 1.828M.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

US Markets finished the second week of June with mixed results.  It was an extremely busy week for investors as key Central Bank policy decisions were announced outside of a full economic calendar centered on two key inflation data sets.  There was also plenty of geopolitics to digest.  A proposed ceasefire in Gaza was assessed by Israel and Hamas with no final agreement.  A snap election called by French President Emmanuel Macron highlighted the changing landscape of European politics and sent European markets lower.  This came as the G7 meeting in Italy addressed the current situation between Europe and Russia and the influences of China’s overcapacity and unfair trade practices.

The Federal Reserve finished its two-day meeting on Wednesday announcing that its current monetary policy rate would remain the same. The Fed also delivered its most recent Summary of Economic Projections, increasing its forecast of inflation and lowering its forecast of rate cuts to one from three.  Markets sold off a bit on the new SEP and the slightly more hawkish tone from Fed Chairman Powell but did manage to retain nice gains after a weaker-than-expected May CPI print put a bid into the markets earlier in the day.   On Friday, the Bank of Japan announced that there would be no change to its policy rate and gave very little details on its quantitative easing program.  The news sent the Japanese Yen lower and hit Japanese equities.  However, Japanese markets stabilized after BOJ Governor Ueda suggested that QE reductions would be articulated in July and expected them to be sizable.

The S&P 500 gained 1.6% on momentum in the mega-caps. The Dow fell by 0.5%, the NASDAQ increased by 3.2%, and the Russell 2000 fell by 1%. Apple’s developer conference drove its shares higher, while shares of NVidia continued to rally after its ten-for-one stock split was exercised. Broadcom announced strong earnings, which helped propel technology issues higher, as did Adobe.

The US Treasury market continued to be volatile.  Treasury yields fell across the curve by double digits as inflation data showed signs of weakening.  The 2-year yield fell twenty basis points to close at 4.69%, while the 10-year yield decreased by twenty-two to 4.22%.  Of note, a weak 3-year Treasury auction was followed by a solid 10-year and 30-year auction, this strong demand also fostered yields lower.  Despite yields moving lower, the US dollar index rallied on a weaker Euro and Yen.

Oil prices increased by 1.3% or $2.58 to close at $78.08 a barrel.  Gold prices jumped by $25.70 to $2349.60 an OZ.  Copper prices rose by $0.03 to $4.50 per Lb.

The Economic calendar was highlighted by weaker inflation data.  Headline CPI came in flat versus an expectation of an increase of 0.1%.  Core CPI, which excludes food and energy, rose 0.2%, lower than the anticipated 0.3%.  On a year-over-year basis, May’s CPI increased by 3.3%, down from April’s 3.4%, while the Core reading rose 3.4% in May versus an increase of 3.6% in April.  Similarly may headline PPI fell 0.2% versus an expected gain of 0.1%. Core PPI came in flat, while the street was looking for an increase of 0.3%.  PPI increased 2.2% annually, 0.1% lower than the April print, while the Core PPI increased by 2.3%, 0.2% lower than the prior month’s reading.  Initial Jobless Claims increased by 13k to 242k, and Continuing Claims rose by 20k to 1.82 million.  These are modest increases but may be an indication that the labor market is weakening.  Interestingly, Fed Chairman Powell suggested that the May Non-Farm Payrolls figure was likely too high and will possibly need to be revised lower.  Finally, the University of Michigan Consumer Sentiment Index surprised to the downside, coming in at 65.6, well below expectations of 73.  The fall came from the assessment that personal finances have weakened.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

The S&P 500 inked its twenty-fifth all-time high for the year, with outperformance coming from the mega-cap technology names.  The Vanguard Mega-Cap Growth ETF was up 3.3% for the week. NVidia and AMD started the week with new product presentations that catalyzed their shares higher and propelled the semiconductor sector higher, too.  NVidia’s market chaptalization surpassed three trillion dollars and overcame Apple as the 2^nd largest company in the world.  NVidia shares will be split ten for one on Monday.  Notably, the largest ten companies in the S&P 500 now constitute 35% of the index the highest concentration since 1972.

A mixed bag of economic data caused wild price moves in US Treasuries and expectations for changes in Federal Reserve monetary policy.  Currently, the markets have priced in a 50% chance of a rate cut in September and an 86% chance in December.  The European Central Bank, as expected, cut its policy rate by 25 basis points- the decision was met with very little market reaction.  The Bank of Canada also lowered its policy rate by 25 basis points and indicated that there was room for more cuts if there was more progress on the inflation front.  The Federal Reserve will meet this week, and it is widely expected to keep its policy rate unchanged at 5.25%-5.50%.  The Fed will provide its most recent Summary of Economic Projections, which will provide clues on the future path of its monetary policy.

The S&P 500 gained 1.3%, the Dow inched higher by 0.3%, the NASDAQ increased by 2.4%, and the Russell 2000 fell by 2.1%.  US Treasuries exhibited volatile trade as economic data released over the week painted a very different outlook.  Treasuries started the week with yields coming off substantially but ended the week on a lower note after a strong Employment Situation report.  The 2-year yield fell two basis points to 4.87%, while the 10-year yield fell eight basis points to 4.43%.

Oil prices fell by $1.58 or 2.1% to close at $75.50 after OPEC+ suggested they would normalize current production cuts this year, adding more supply to the market.  Gold prices declined by $19.70, closing at $2323.90 an Oz.  Copper prices fell for the third consecutive week, losing 2.8% to close at $4.45 per Lb.  Bitcoin topped $71,000 but ended the week at ~$69,200.  The US dollar index gained 0.3% and closed at 104.89.

The economic calendar was full and provided something for everyone.  ISM Manufacturing showed a stronger contraction than expected, coming in at 48.7, below the prior reading of 49.2.  ISM non-manufacturing came in hotter than expected, showing services expanding to 53.8 from 49.4.  Of note, the prices paid component in the services number was much lower than the prior month.  JOLTS data on job openings showed the fewest amount since 2021.  Q1 productivity was slightly less than expected at 0.2%, as Unit Labor Costs declined from 4.7% to 4%.  Initial Jobless Claims ticked higher by 8k to 229k.  Continuing Claims increased by 2k to 1.792M.  The Employment Situation report came in much stronger than anticipated and catalyzed a strong sell-off across the entire yield curve.  Non-farm payrolls increased by 272k versus the consensus estimate of 185K.  Private Payrolls grew by 229k, well above the expected 168k.  The Unemployment rate rose to 4% from 3.9%, while Average Hourly Earnings increased more than expected at 0.4%.  Over the last year, wages have increased by 4.1% versus 4% for the 12 months ending in April. Finally, the Average Workweek remained at 34.3 hours.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

The holiday-shortened week on Wall Street was volatile. The last of first-quarter earnings continued to influence the markets. Earning results from the retailers were mixed as BestBuy, Footlocker, Nordstrom’s, and Costco’s shares increased on better-than-expected results, while Kohl’s and Dollar General’s results produced sharp sell-offs. Investors continue to keenly watch consumer spending behaviors for clues on the health of the economy. Key economic data released over the week suggested the consumer may be starting to tighten their purse strings. Large Technology issues came under pressure as Salesforce’s sales growth projections were well below the street’s estimates and from disappointing guidance from Dell and MongoDB. A visible rebalance throughout the week from growth to value was evident and given the outperformance of growth over value year to date makes some sense to us. Similarly, a move away from mega caps and into other areas of the market could be seen in the divergence in the market cap-weighted S&P 500 index performance relative to the equal cap-weighted S&P 500 index. Other significant news on the tape included the merger agreement between ConocoPhillips and Marathon for a value of $22.5 billion, the government funding of a bird-flu vaccine produced by Moderna, and former President Donald Trump being found guilty on all 34 charges by a Manhattan jury.

The S&P 500 lost 0.5% for the week but was up 5% in May and 10.6% year-to-date. The Dow gave back 1%, was up 2.4% in May and 2.6% year-to-date. The NASDAQ shed 1.1% over the week but gained 7.3% in May and has gained 11.5% for the year. The Russell 2000 was unchanged on the week, was up 4.7% in May, and 2.1% for the year. US Treasuries endured another volatile week as auctions in 2-year, 5-year, and 7-year notes saw tepid demand. However, the mixed economic data released in the back half of the week put a bid into Treasuries. The 2-year yield fell by four basis points on the week and fell by sixteen in May, ending the month at 4.89%. The 10-year yield decreased by four basis points to 4.51%, and was down eighteen basis points in May.

Oil prices fell nearly 1% on the week and closed off 5.5% or $4.47 in May to $77.08 a barrel. Gold prices fell by $10.80 on the week to close at $2345.60 an Oz. Copper continued to come off its most recent highs, losing $0.15 and closing at $4.60 per Lb. The Dollar index lost 1.6% in May and closed the week at 104.65.

The Fed’s preferred measure of inflation, the PCE, was the highlight in a busy economic data calendar. The headline reading showed an increase of 0.3%, which was in line with estimates. On a year-over-year basis, it came in at 2.7%, unchanged from the March figure. The Core reading that excludes food and energy rose 0.2%, slightly less than the expected 0.3%. The Core reading came in at 2.8% year-over-year and has been stuck at that level for the last three months. Personal Income rose by 0.3%, in line with expectations, while Personal Spending was a bit lighter than expected at 0.2% versus 0.3%. The 2nd look at Q1 GDP came in at 1.3%, down from the first look, of 1.6%. A deceleration of consumer spending was the culprit for the majority of the downtick, coming in at 2% versus 2.5%, causing some additional concerns about the health of the consumer. The GDP deflator came in at 3%, down from 3.1% in the prior reading. May Consumer Confidence came in much stronger than expected on good feelings about the labor market. The reading came in at 102, up from the prior reading of 97. Initial Claims increased by 3k to 219k, while Continuing Claims increased by 4k to 1.791 million.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 5/24/2024

-Darren Leavitt, CFA

Financial markets ended the week with mixed results. All eyes this week were on AI darling NVidia, which posted better-than-expected Q1 results and provided guidance above the consensus estimates. The company also increased its dividend by 150% and announced a ten-for-one stock split, sending shares higher by 9%.   Arguably, NVidia’s results were the most important Q1 earnings report of this earnings season and confirmed that the AI trend is still intact, which portends continued capital expenditures on AI by global corporations.  Markets also took cues from the FOMC minutes that reinforced the notion of higher for longer but noted that most on the committee thought that current monetary policy was sufficiently restrictive.  Next week, investors will get a look at the Fed’s preferred measure of inflation, the PCE, which is likely to show continued moderation in inflation.

The S&P 500 closed the week unchanged, while the NASDAQ gained 1.5% and established a new all-time high.  The Dow lost 2.4%, and the Russell 2000 shed 1.3%. US Treasuries sold off across the curve, with shorter-tenured paper taking the bulk of the losses.  The 2-year yield increased by thirteen basis points to 4.95%, while the 10-year yield rose by four basis points to 4.46%.  The 2-10 spread compressed to -49 basis points.  Commodities were weak across the board as some of the most recent sizeable gains in precious metals regressed.  West Texas Intermediate crude prices declined by $1.73 or 2.2% to close at $77.81 a barrel.  Gold prices fell by $83.30 to close at $2334.80 an Oz.  Copper prices lost $0.30 or 5.4% to $4.75 per Lb.  The US Dollar index added 0.3% to close at 104.69.

The economic calendar was relatively quiet this week, but there were a couple of notable data sets. The preliminary S&P Global Manufacturing and Services PMIs showed increased expansion.  The manufacturing PMI came in at 50.09 versus an expected 50 print, while the services PMI came in at 54.8 versus the expected reading of 51.3.  This increased activity bolstered the idea that the Fed will continue to hold rates higher for longer and pushed out expectations of a rate cut.  There is currently a 49.4% probability assigned to a rate cut in September, a 61.6% chance in November, and an 81.6% probability for a December rate cut.  The final reading of the University of Michigan’s Consumer Sentiment index came in at 69.1 versus an expected 67.6.  This was the lowest reading in 5 months but showed consumer’s inflation expectations moderating over the next year and in the long run.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 5/17/2024

-Darren Leavitt, CFA

The major US equity indices inked a fourth consecutive week of gains as US Treasury yields fell on an in-line CPI print that showed a deceleration of inflation for the first time in three months. Still, Fed Speak suggested the higher for longer narrative is the base case. The market rally was broad-based and established new record highs for the S&P 500 and the Dow Jones Industrial Average, which traded above 40,000 for the first time.  The tail end of earnings saw disappointing results from Home Depot, while Walmart showed increased traffic from more affluent customers.  MEME stocks were back in vogue, with GameStop and AMC exhibiting extreme volatility.  The increased speculation within these issues prompted caution from some investors, who suggested that this activity could insinuate too much speculation in the market.  Wild swings in some commodities this week gave more weight to the idea of an overly speculative market.

The S&P 500 continued its impressive performance, increasing by 1.5%, and is now higher by 11.2% year-to-date.  The Dow closed above 40,000 with a 1.2% advance, the NASDAQ led with a gain of 2.1%, and the Russell 2000 added 1.7%.

US Treasuries rallied across the curve, with longer-tenured paper outperforming.  The 2-year yield fell by five basis points to 4.82%, while the 10-year yield dropped by eight basis points to 4.42%.  The 2-10 spread compressed to -40 basis points.

Gold prices increased by 1.8% to $2418.10. Copper prices rose by 8.3% this week as trades got caught in a short squeeze that induced the exchanges to increase margins.  Nickel prices increased by over 5% as key processing factories in New Caledonian were poised for closure due to violent protests over voting rights.  Oil prices increased by 1.6% or $1.26 to close at $79.54.  Increased input costs from commodities will support the idea of sticky inflation.  The US dollar index increased by 0.8% to 104.46.

The economic calendar was highlighted by the April CPI print.  Headline CPI increased by 0.3% on a month-over-month basis versus an expected increase of 0.4%.  On a year-over-year basis, CPI was up 3.4% in April, down from 3.5% in March.  Core CPI, which excludes food and energy, increased by 0.3%, in-line with the street’s expectations.  Core CPI was up 3.6% yearly, down from 3.8% in March.  Notably, shelter costs rose 0.4% in April and was up 5.5% year-over-year.  April headline PPI increased by 0.5%, higher than the anticipated 0.3%.  Core PPI was also hotter than expected, coming in at 0.5% versus the estimated 0.2%.  Retail sales came in flat versus the estimate of 0.2%, while the Ex-auto figure came in line with estimates at 0.2%.  Initial Claims fell by 10k from the prior week to 222k, while Continuing Claims increased by 13k to 1.794M.  Housing Starts and Building Permits were weaker than expected, coming in at 1360k and 1440K, respectively.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 5/10/2024

-Darren Leavitt, CFA

The S&P 500 notched a third consecutive week of gains as the index broke and held above its 50-day moving average.  Investors were treated to another dose of first-quarter corporate earnings. Disney, Uber, and ARM results were disappointing, while Taiwan Semiconductor’s monthly revenues beat expectations and sparked a rally in the Semiconductors.   Over 80% of the S&P 500 companies have posted their quarter earnings, and earnings growth looks well above pre-earnings season estimates.  Sector performance over the week was led by the Utilities, Financials, Materials, and Consumer Staples.  This change in market leadership from technology to other sectors shows that the market rally is trying to broaden.  This broadening out can also be seen with interest in European and Asia equities, where central bank policy will likely become more accommodative in the next couple of months.  The Bank of England kept its policy rate in place but did indicate that it is poised to cut rates in the near future.

The S&P 500 gained 1.9%, the Dow rose by 2.2%, the NASDAQ added 1.1%, and the Russell 2000 increased by 1.2%.  US Treasuries lost some ground this week, but trade seemed fairly quiet relative to the last several weeks.  Interestingly, this relatively quiet market came as the Treasury auctioned $125 billion in Treasuries.  The auction results were mixed, with the 3-year and 10-year auctions getting tepid interest, while the 30-year saw decent interest.  The 2-year yield increased by six basis points to 4.87%, while the 10-year yield was unchanged on the week at 4.50%.  Oil prices were little changed for the week closing at $78.20 a barrel.  Gold prices increased by 2.8% to close at $2374.80 an Oz.  Copper prices bounced back this week, gaining $0.11 to $4.66 per Lb.  The US Dollar index increased by 0.2% to 105.3.

The economic calendar was light but we did have a number of Fed Officials that spoke throughout the week.  Bowman and Kashkari came across as the most hawkish, while Daly, Collins, and Williams reiterated the idea of higher for longer, with a rate cut coming sometime this year after more economic data has been assessed.   The preliminary reading of the University of Michigan’s Consumer Sentiment Index caught some attention as it showed a troubled consumer who is worried about inflation, high interest rates, and employment.  The index fell to a six-month low at 67.4, well below the prior reading of 77.2.  The consumer has so far been resilient and continuing to spend; if this changes, so too will the narrative of a soft landing.  Coming off the weaker-than-expected employment data from the prior week, investors saw an uptick in Initial Jobless claims to 231k, up 22k from the prior week.  Similarly, Continuing Claims increased by 17k to 1.785M.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 4/26/2024

-Darren Leavitt, CFA

US equity markets bounced back last week, with nearly 40% of the S&P 500 companies reporting first-quarter results. The rally was propelled by Microsoft and Google, whose better-than-expected earnings not only boosted investor confidence but also bolstered the narrative on artificial intelligence. This positive AI narrative continues to be a tailwind for the technology sector.  The semiconductor sector rallied nearly 10% on the idea that the largest technology companies will continue to spend billions on chips and AI infrastructure.   While validating the sell-off we saw in the first quarter, Tesla’s earnings results also provided hope with the announcement of a low-cost EV to be introduced later this year and the planned implementation of its Robotaxi initiative. Meta’s results led to a significant sell-off due to what some deemed tepid revenue guidance and increased capital expenditures for AI and the Metaverse. Apple and Amazon will report their Q1 results this week, likely echoing AI spending, but both companies have faced their challenges in the first quarter, namely sluggish iPhone sales and what appears to be a loss in market share for AWS.

The S&P 500 gained 2.7%, the Dow increased by 0.7%, the NASDAQ added 4.2%, and the Russell 2000 rose by 2.8%.  US Treasuries sold off across the curve and posted the highest yields this year.  However, this week’s sell-off in Treasuries was relatively tame, given what we have seen over the last few weeks.  The 2-year yield increased by two basis points to close at 5%, while the 10-year yield increased by five basis points to 4.67%.  The 2-10 spread continues to show an inversion, but it compressed to -33 basis points.  Notably, the three Treasury auctions this week were met with solid demand.  West Texas Intermediate crude prices increased by $1.63 or 2% to close at $83.72 a barrel.  Gold prices fell by 2.2% or $66.90 to $2347.90 an Oz.  Copper prices hit a three-year high, closing up 1.7% to $4.57 per Lb.  BHP offered to buy Anglo American this week, and if successful, the combined companies would be the largest copper mining company in the world.  The US Dollar index fell by 0.1% to 105.97; however, the Dollar inked its best level to the Japanese Yen in three decades.  The Bank of Japan left its policy rate unchanged and signaled little to discourage the Yen’s weakness.  That said, I expect the BOJ to intervene in the next few days to stem the selling and the Yen from hitting 160.

The economic data reported this week presented a mixed picture.  The first look at Q1 GDP showed growth of 1.6%, significantly lower than the previous rate of 3.4% and the consensus estimate of 2.4%. However, the GDP Deflator increased to 3.1% from 1.6%, surpassing the expected 2.9%.  This combination of slower growth and higher prices raised concerns about stagflation. On a positive note, the labor market remained resilient, with Initial Claims falling by 5k to 207k and Continuing Claims dropping by 15k to 1.781m.  In the upcoming week, we will get a look at the Employment Situation Report, which is expected to show the creation of 250k non-farm payrolls and an unemployment rate unchanged at 3.8%.  Personal Income increased by 0.5%, as expected, while Personal Spending Increased by 0.8%, above the consensus estimate of 0.6%.  Again, a healthy labor market allows the consumer to continue to spend.  Finally, the Fed’s preferred measure of inflation, the PCE, came in line with expectations on both the headline and core at 0.3% on a month-over-month basis.  On a year-over-year basis, the headline number increased by 2.7%, up from 2.5% in February, and the Core reading increased by 2.8%, which was unchanged from the February print.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 4/19/2024

-Darren Leavitt, CFA

Financial markets took another step back last week as investors grappled with increased tensions in the Middle East and the recognition that interest rates are likely going to be higher for longer.

Iran fired back at Israel last weekend with a barrage of drones and missile attacks.  The move had been widely telegraphed- Israel was prepared and effectively defended itself.  The worry for most investors is that these back-and-forth attacks continue and escalate into a much larger conflict.  Israel responded with its own counter later in the week but did not inflect very much damage on Iranian assets; this was seen as a move to try and de-escalate the situation.

Last week, there were plenty of Federal Reserve officials to listen to for their latest reading on monetary policy. Fed Chairman Jerome Powell pushed the timeline out for when rate cuts would begin, referencing the hotter-than-anticipated inflation data over the last couple of months.  Currently, there is a 65% possibility of a 25 basis point rate cut at the September meeting, and the market now expects 1 to 2 rate cuts this year.  The higher-for-longer narrative has taken hold, with many market participants now thinking there may be no cuts this year.  I think this idea of no cuts this year is what hit the market this week.  We have been writing about the recalibration of rate cut expectations for some time, and we were wondering if the equity markets were ignoring what had been going on in the rates market- well the S&P 500 has now closed lower for six consecutive sessions.

The S&P 500 fell 3.1%, the Dow was unchanged on the week, the NASDAQ plunged 5.2%, and the Russell 2000 lost 2.8%.  Mega-Cap tech was particularly hard hit as semiconductor stalwarts NVidia, ASML, and Taiwan Semiconductor were aggressively sold.   The S&P 500 is off 5.6% from its recent all-time high.   The US Treasury market continued to be under pressure and, interestingly, has not really provided any safe-haven qualities given the current geopolitical landscape.   The 2-year yield increased by nine basis points to close at 4.97%, while the 10-year yield increased by twelve basis points to 4.62%.  Of note, there was a decent 20-year US Treasury auction last week that came off the back of three not-so-good auctions in the prior week.  Some risk premium came out of oil later in the week as tensions in the Middle East were softened.  WTI closed down 4% to $82.09 a barrel.  Gold prices increased by 1.6% or $40.30 to $2414.80 an Oz.  Copper prices continued to soar, gaining 5% this week to close at $4.49 per Lb.  Despite strong intervention from several emerging market central banks, the US dollar index closed the week with little change.

The economic calendar was fairly quiet last week.  Retail sales data showed that consumers are still out spending.  The headline number came in at 0.7% versus an estimated 0.3%.  The Ex-auto figure came in at 1.1% versus the consensus estimate of 0.6%.  Housing data reported over the week was weaker than anticipated.  Housing Starts, Permits, and Existing Home Sales missed the mark as 30-year Mortgage rates approach 7.5%.  Initial Claims came in at 212k for the second week in a row, while Continuing Claims rose by 2k to 1812k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 4/12/2024

-Darren Leavitt, CFA

Financial markets pulled back for the second consecutive week as investors continued to recalibrate monetary policy expectations and assess the most recent conditions in geopolitics.

A stronger-than-anticipated Consumer Price Index, announced on Wednesday, pushed expectations for the timing of the first rate cut to September from June. The hotter print also modified expectations of how many cuts the market expects this year from three to two. The news significantly impacted US Treasuries across the curve and gave equity investors a reason to take money off the table. Rate-sensitive sectors such as Real Estate and Financials were particularly hard hit during the week.

The banks kicked off earnings season on Friday, and the results were disappointing. JP Morgan’s CEO, Jamie Diamond, echoed the cautious sentiment he provided in a shareholder letter sent early in the week on the earnings conference call while delivering an in-line expectation for the coming quarter. The stock fell 6.47% after their earnings announcement, catalyzing a broader sell-off within the Financial Sector.

There were numerous reports out Friday that there was an imminent attack planned on Israel by Iran.  Traders fearful of an escalation of tensions in the region bid up safe-haven assets and sold risk assets.  The reports come after Israel attacked Iran’s embassy in Syria, where 7 Iranian officials were killed.  Hezbollah, an Iranian proxy in Lebanon, continues to launch attacks from the north, while the Yemen-based Houthis continue to be a menace for assets in the Red Sea.  Reports suggest that Iran will hit Israel with drones and missiles in the next couple of days.  As I write this recap, an Iranian paramilitary group has taken control of an Israeli-owned tanker in the Strait of Hormuz and directed it to Iranian waters.  The Strait of Hormuz is considered a significant shipping route and will undoubtedly put a bid into the energy markets.

The S&P 500 fell by 1.6%, the Dow lost 2.4%, the NASDAQ shed 0.5%, and the Russell 2000 gave back 2.9%.  US Treasuries yield increased across the curve despite a safe-haven bid into Treasuries on Friday.  The 2-year yield increased fifteen basis points to close at 4.88% after trading north of 5%.  The 10-year yield increased by twelve basis points to 4.50%, the highest level of the year.  Commodities finished the week mixed.  West Texas Intermediate Crude prices fell by $1.22 or 1.4%.  Gold traded above 2400 before settling up $29.20 for the week at $2374.50 an Oz.  Copper prices increased by $.02 to $4.26 per Lb., the highest level in two years.  The US dollar index screamed higher, gaining 1.7% on the week and closing at 106.2.

The economic calendar was centered on the Consumer Price Index, which showed higher-than-expected inflation on both the headline and core readings.  Headline CPI increased by 0.4% versus an estimated 0.3% and increased by 3.5% year-over-year, above the 3.5% increase registered in February.  Core CPI, which excludes food and energy, rose by 0.4% and was up 3.8% year-over-year for the second consecutive month.  The Producer Price Index showed less-than-expected price increases on a month-over-month basis but saw the year-over-year figure increase to 2.1% from 1.6% in February.  Initial Claims came in at 211k versus an estimated 216k, while Continuing Claims increased by 28k to 1817k.  The second preliminary look at the University of Michigan’s Consumer Sentiment saw it regress to 77.9 from 79.  Small business optimism also saw a pullback.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

Wall Street took a step back in the first week of the second quarter as robust economic data induced a recalibration of rate cut expectations. The recalibration was further influenced by Minneapolis Fed Governor Neel Kashkari’s suggestion that the Fed may not need to cut rates this year if inflation remains elevated, a statement that arguably hit the market Thursday afternoon.  Earlier in the week, Fed Chairman J. Powell echoed his prior statements that the Fed’s next move would likely be cutting rates but anchored that statement to data dependency which leaves the Fed with plenty of options.

A sense that Iran is prepared for retaliation on Israel and or United States assets in the region in response to the airstrike on its embassy in Syria that killed 7 Iranian officials was also cited as a possible catalyst to sell risk assets on Thursday afternoon.  The move lower in equities coincided with a safe-haven bid into US Treasuries and a bid into the oil market.

The late afternoon move lower on Thursday stands out because it was a meaningful reversal from sizeable gains forged earlier in the session.  Technically, the S&P 500 looks overbought at these levels, so the narrative that the market needs a pullback seems warranted.  The S&P 500 has traded above its 50-day moving average by over one standard deviation for over 50 days.  Price action in market leadership was lackluster as well and may also give a reason for pause.

A blockbuster Employment Situation Report on Friday prompted a broad-based rally that reversed the losses incurred on Thursday.  Friday’s rally derived from the idea that if the labor market remains resilient, the consumer will spend, leading to solid corporate earnings. By the way, the second-quarter earnings season will start in earnest this coming week, with the financials on deck to report results in the latter part of the week.

The energy and communication services sector inked gains for the week, while all the other sectors ended in the red. The healthcare sector was particularly weak as the government announced that it would keep the Medicare Advantage Plan rate unchanged at 3.7% when many were expecting an increase. United Healthcare, Elevance Health, CVS, and Humana sold off in the wake of the announcement.

The S&P 500 lost 1.1%, the Dow shed 2.4%, the NASDAQ fell by 0.9%, and the Russell 2000 gave back 3%.  US Treasuries sold off across the curve.  The 2-year yield increased by eleven basis points to 4.73%, while the 10-year yield jumped by fifteen basis points to 4.38%.  Bonds sell-off when their yields increase.  Commodities continued to show relative strength.  West Texas Intermediate crude closed the week 4.3% higher at $86.60 a barrel.  Gold prices increased by $105.90 or 4.7% to a record high of $2345.30 an Oz.  Copper prices advanced by $0.23 or 5.7% to close at $4.24 per Lb.  The US Dollar index fell by 0.2% to 104.30.

The economic calendar was all about Friday’s Employment situation report.  The much stronger-than-expected report showed 303k Non-farm payrolls versus street expectations of 200k.  Similarly, Private payrolls grew by 232k versus an expected 160k.  The Unemployment rate stayed at 3.8%, relative to the consensus estimate of 3.9%.  Average hourly earnings increased by 0.3%, which was in line with expectations. On a year-over-year basis, Average Hourly earnings increased by 4.1% in March, down from 4.3% in February. The Average Workweek increased to 34.4 from the expected 34.3.  Initial Claims ticked up by 9k to 221km, while Continuing Claims fell by 19k to 1.791M.  ISM Manufacturing showed expansion for the first time in 16 months.  The reading came in at 50.3, well above the estimate of 47.8.  ISM Services came in a little lighter than expected at 51.4 and was down from the previous reading of 52.6.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 3/28/2024

-Darren Leavitt, CFA

The S&P 500 hit another all-time high this week as investors appeared to rebalance positions into quarter end.  The week started with some weakness on the announcement that the EU was investigating Meta, Google, and Apple on compliance concerns related to the Union’s Digital Market Act. The move coincided with the announcement that China would ban imports of chips made by AMD and Intel.  That said, over March, there has been an evident broadening out of the market’s rally away from high-flying technology to other sectors such as Energy, Financials, and Industrials.  The Magnificent Seven of 2023 morphed into the Fab Five as Tesla and Apple inked losses for the quarter.  NVidia led gains in the group with an 87.59% advance.  Consolidating the outsized moves seen over the last several months makes sense, and the broadening out of the rally is most likely a healthy indicator.   Fed rhetoric this week skewed to the hawkish side as Atlanta’s Bostic called for only one rate cut this year, and Chris Waller suggested that he is not in any hurry to lower rates.  Fed Chairman J Powell is scheduled to speak on Friday while global financial markets are closed for Good Friday.

The S&P 500 gained 0.5%, ending March up 3.3% and is up 10.2% since the beginning of the year.  The Dow Jones notched a 0.9% increase for the week, is up 2.1% for the month, and 5.6% higher from the start of the year.  The NASDAQ lost some ground this week with a loss of 0.3% but was up 1.8% in March and 9.1% year to date.  The Russell 2000, which has lagged much of the year, ended the week up 2.6%, the month up 3.4%, and is higher by 4.8% in 2024.

US Treasuries ended the quarter not too far from where they started in March but did gain ground across the curve.  The 2-year yield declined by two basis points to close at 4.62%, while the 10-year yield fell by five basis points to 4.20%.  The probability of the first rate cut in June is now 64%.

Oil prices continued to advance, increasing by $2.34 this week and by $4.72, or 6% for the month, to close at $82.99 a barrel.  Gold prices increased by 9% or $185.30 to close at $2239.40 an Oz.  Copper prices rallied 4.1% for the month on the announcement that China would curb smelting.  The US dollar index gained 0.3% for the month, with outsized gains against the Japanese yen, while the Chinese Yuan was weaker against the US dollar.

Friday’s PCE print highlighted economic data for the week. The headline number was 0.3%, below the estimate of 0.4%. On a year-over-year basis, headline PCE increased in February to 2.5% from 2.4% in January. Core PCE, which excludes food and energy, came in as expected at 0.3% and grew at 2.8% annually, slightly lower than the 2.9% reading in January.  Personal Spending for February was stronger than expected at 0.4%, while Personal Income came in a bit weaker than anticipated at 0.3%.  Consumer confidence was weaker than expected, coming in at 104.7 versus the estimated 106.7.  Interestingly, the final reading of the University of Michigan’s consumer sentiment increased to 79.4 versus the February reading of 76.9, predicated on lower inflation expectations.  The third look at 4^th quarter GDP ticked to 3.4% from 3.2% while the GDP deflator stayed at 1.6%.  Initial Claims decreased by 2k this week to 210k, while Continuing Claims increased by 24k to 1.819M.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

US equity markets forged another set of new highs in an extremely busy week on Wall Street.  Global Central Banks took center stage, headlined by the Bank of Japan, the US Federal Reserve, and the Bank of England.  The BOJ, as expected, moved away from its negative rate policy and raised its policy rate to a range of 0% to 0.1%.  The bank also announced that it would stop purchasing ETFs and REITS.  The BOJ remains very accommodative and that dovish stance induced a sell-off in the Yen/US Dollar cross and rallied the Japanese equity market.  The Federal Reserve kept its policy rate range at 5.25% to 5.5%, and the Summary of Economic Projections showed that officials still expect three quarter-point rate cuts this year.  A dovish tone from Chairman J. Powell in the post-statement Q&A fostered an asymmetric view that the Fed cares more about slowing economic growth than inflation concerns. Powell reiterated that the Fed would continue to monitor the economic data and formulate its policy accordingly.  The Chair also acknowledged that it would soon be time to end its quantitative tightening measures to normalize the balance sheet.  Investors loved what they heard and put a bid into equities, sending the S&P 500 above 5200 for the first time.  The Bank of England also kept its policy rate at 5.25% in an 8 to 1 vote.  Rhetoric from the BOE was also on the dovish side, and expectations shifted for the next move to be a cut rather than a rate hike.

The week was also quite busy on the corporate front. It started with the announcement that Apple was considering using Google’s Gemini AI platform on the iPhone.   Later in the week, the DOJ announced a lawsuit against Apple regarding antitrust concerns. High flier NVidia showcased its new Blackwell AI platform at its GTC conference.  The event did not disappoint, propelling NVidia shares higher by over 7% on the week.  The Reddit IPO was priced at $34 a share and gained 48% in its debut on the New York Stock Exchange.  The company ended the week with a market cap of $9.5 billion.  Federal Express and Micron Technology posted better-than-expected Q4 earnings results, which catalyzed their respective sub-sectors.  On the other hand, consumer discretionary companies Lululemon and Nike posted disappointing earnings.

The economic calendar was relatively light but was highlighted by stronger housing data and a resilient labor market.  Housing Starts increased by 10.7% in February with a seasonally adjusted 1.521m units.  Building permits were up 1.9% month-over-month, coming in at 1.518M.  February Existing Home Sales came in at 4.38M, well above the 3.92M consensus estimate.  Initial Jobless claims fell by 2k to 210k, while Continuing Claims increased by 4k to 1.807m.  A preliminary look at S&P Global Manufacturing and Services PMI indicated both sides of the economy are in expansion mode.  However, the Services PMI showed its expansion moderating.

The S&P 500 advanced 2.3%, the Dow rose 2%, the NASDAQ increased 2.9%, and the Russell 2000 jumped 1.6%.  The US yield curve steepened with shorter tenured paper yields decreasing more than longer duration yields.  The 2-year yield fell by twelve basis points to 4.6%, while the 10-year yield fell by eight basis points to 4.22%.  Oil prices changed a little during the week, with WTI closing lower by $0.34 to $80.65 a barrel.  Gold prices barely moved on the week, losing $0.50 to close at $2160.20 an Oz.  Copper prices digested some of its recent move by giving back $0.11 to close at $4.01 per Lb.    The US Dollar rallied this week, with the Dollar index gaining 1% and closing at 104.46.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 3/15/2024

-Darren Leavitt, CFA

Markets pulled back this week as investors assessed hotter-than-anticipated inflation data. US Treasuries sold off across the curve as the higher-for-longer narrative strengthened ahead of the coming Federal Open Market Committee meeting.  Investors are not expecting a change to the policy rate on Wednesday.  However, they will be keenly focused on the new summary of economic projections that will show the Fed’s view of the future path of the monetary policy rate- also known as the dot plot.

The S&P 500 fell by 0.1%, the Dow was unchanged, the NASDAQ declined by 0.7%, and the Russell 2000 lost 2.1%.  US Treasuries had a tough week.  The 2-year yield increased by twenty-three basis points to close at 4.72%, while the 10-year yield rose by twenty-one basis points to 4.30%.  Oil prices increased by $2.94 or 3.8% to $80.99 a barrel.  Gold prices declined by $25 to $2160.60 an Oz.  Copper prices jumped 5.9% as China’s top copper smelters agreed to production cuts.  Copper closed the week at $4.12 per Lb.  Bitcoin touched another all-time high before settling back to around $68k.  The US Dollar index gained 0.1% to 103.43.

The economic calendar was highlighted by the Consumer Price Index and the Producer Price Index.  Both readings came in hotter than expected.  Headline CPI increased by 0.4% versus the street expectation of a 0.3% increase.  On a year-over-year basis, the CPI increased by 3.2% in February versus a 3.1% gain in January.  The Core CPI, which excludes food and energy, rose by 0.4% versus an estimated 0.3% increase and was up 3.8% year-over-year, down from 3.9% in January.  Shelter costs continued to be sticky, gaining 0.4% in February.  Headline PPI came in at 0.6%, much higher than the anticipated 0.3% increase.  The year-over-year figure increased by 1.6% from January’s 0.9%.  The Core number was up 0.3%, slightly above the 0.2% consensus estimate, and came in at 2% year-over-year, unchanged from January.  Increased energy costs had a prominent influence on the headline number.  Goods inflation ticked higher at the producer level.  Retail sales got a nice bounce from January, rising 0.6%.  The Ex-Autos Retail sales figure came in at 0.3%.  The labor market continues to be tight as Initial Jobless claims fell by 1k to 209k.  Continuing Claims rose by 17k to 1.811m.  A preliminary look at the University of Michigan’s Consumer Sentiment index showed a decline of sentiment to 76.5 from 77.3 in February.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 3/8/2024

-Darren Leavitt, CFA

Financial markets endured a week of consolidation as investors dissected a full economic calendar and awaited more cues from the leaders of the European Central Bank and the Federal Reserve.  ECB President Lagarde and Fed Chairman Powell echoed each other about the need for more data before the central banks would cut rates.  However, both leaders left the door open and expect rate cuts later in the year.  A handful of fourth-quarter earnings reports were highlighted by retailers- Costco and Target, Semiconductor stock Broadcom, and Cybersecurity software company Crowd Strike.

The S&P 500 lost 0.3%, the Dow fell by 0.9%, the NASDAQ shed 1.2%, and the Russell 2000 gained 0.3%.  US Treasuries gained across the curve as interest rates fell for a second week.  The 2-year yield fell by four basis points to 4.49%, while the 10-year yield declined by nine basis points to 4.09%.  Oil prices fell 2.4% or $1.92 to $78.05 a barrel. Gold prices increased by 4.2% to set an all-time high, closing at $2185.60 an Oz.  Copper prices rose by $0.03 to close at $3.89 per Lb.  Bitcoin traded north of 70k per token, also hitting a new all-time high.  The US Dollar index fell by 1.1% over the week, closing at 102.71.

An Employment Situation Report fostered a soft landing narrative that saw massive downside revisions to the January figures, an uptick in the Unemployment rate, and a lighter increase in average hourly earnings.  Non-farm payrolls came in at a robust 275k versus the consensus estimate of 195K.  The January reading was revised downward from 353k to 229k.  Similarly, Private Payrolls came in higher than expected at 223k, and the prior month’s estimate was revised to 177k from 317k.  The Unemployment rate ticked to 3.9%, which was higher than the anticipated rate of 3.7%.  Average Hourly Earnings increased by 0.1% on a month-over-month basis, which was less than the expected 0.3% increase. The Average Workweek ticked a bit higher to 34.2 from the prior reading of 34.1.  Initial Jobless claims for the week remained unchanged at 217k, while Continuing Claims increased by 8k to 1.96m.  ISM Non-Manufacturing showed that services remained in an expansionary mode.  However, the reading of 52.6% was less than the prior reading of 53.4%.  The second reading for fourth-quarter productivity came in at 3.2%, while unit labor cost fell to 0.4% from 0.6%.

This week’s economic calendar will also be quite busy. Investors will examine February Consumer and Producer prices. We will also get a look at Retail Sales figures and Industrial production. The Treasury will also auction $117 billion in 3, 10, and 30-year paper.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

Markets pushed back on an early week sell-off to close at record highs for the S&P 500 and NASDAQ.  A building sense that the market is due for a pullback was met with inline consensus inflation data, continued outperformance in the semiconductors, and a noticeable outperformance in small-cap issues.  In Washington, politicians were able to avoid a government shutdown for the time being with hopes that a full-year spending bill could be forged in September.  Fed speak over the week was in line with prior rhetoric, while European central bank officials called for rate cuts sooner rather than later, and Bank of Japan policy comments continued to come from both sides of the mouth.

The S&P 500 gained 0.9% and is up 7.7% for the year.  The Dow fell 0.1% even as Dow component Salesforce.com gained 8.2% on the week.  The NASDAQ joined the S&P 500 and DOW with a new all-time high, adding 1.7% on the week and forging an 8.4% advance in 2024.  The Russell 2000 outperformed with a 3% jump and turned positive for 2024.  Interestingly, the market-weighted S&P 500 index underperformed the equal-weighted S&P 500 index, while the equal-weighted index matched the performance of the Mega-cap weighted index.

US Treasuries rallied across the curve with shorter-duration tenors, outperforming their longer-duration counterparts. The 2-year yield fell by nineteen basis points to 4.53%, while the 10-yield declined eight basis points to 4.18%.  Surprisingly, yields dropped even with weak showings in the 2-year and 5-year auctions.

Oil prices rallied as conflict in the Middle East continued, and the hope for a ceasefire in Gaza anytime soon diminished.  Talk that the upcoming OPEC+ meeting would result with continued production curbs also allied the rally.  WTI gained 4.5% or $3.45 on the week to close at $79.97 a barrel.  Gold prices gained 2.3% or $47.30 to close at $2095.50 an Oz.  Copper prices fell by $0.02 to $3.86 per Lb. Notably, Bitcoin broke above the $60,000 level to close at $61,894, about $ 7,000 shy of its all-time high.  The US dollar index changed little, going up 0.1% to 103.84.

The economic calendar was stacked this week with investors keenly focused on the Fed’s preferred measure of inflation, the PCE.  The headline reading of PCE came in a bit lighter than expected at 0.3% and showed a decline year-over-year to 2.4% in January from 2.6% in December.   The Core reading, which excludes food and energy, came in line with expectations at 0.4% on a month-over-month basis and also showed a decline on a year-over-year basis at 2.8% in January versus 2.9% in December.  The Core reading was the lowest since March of 2021 and encouraged the notion that inflation continues to subside.  Personal Income rose by 1%, higher than expected, while Personal Spending was in line with expectations at 0.2%.  The final reading for the University of Michigan’s Consumer Sentiment Index slightly declined to 76.9 from the prior month’s reading of 78.8.  January Pending Home Sales fell by 4.9%, well below the estimated gain of 0.1%.  The February S&P Global Manufacturing PMI increased to 52.1, above January’s 51.5 result.  Interestingly, the ISM Manufacturing Index showed further contraction, coming in at 47.8 versus the prior month’s reading of 49.1.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

The S&P 500 and the Dow Industrial Average forged new all-time highs despite investors taking profits early in the holiday-shortened week.  Semiconductor stalwart NVidia’s fourth-quarter earnings results induced a massive rally in the stock and brought the rest of the market along with it.  The Company meaningfully beat street expectations and raised guidance above the current consensus.  The move on Thursday tacked on over 200 billion in market capitalization and catapulted the company’s value to north of $2 trillion.  The markets also digested the news that Capital One would takeover Discover for $35.3 billion.

The S&P 500 gained 1.7%, the Dow rose 1.3%, the NASDAQ added 1.4%, and the Russell 2000 lagged, losing 0.8%.  Trade in US Treasuries favored longer-tenured paper.  The 2-year yield increased by seven basis points to 4.72%, while the 10-year yield fell by four basis points to 4.26%.  Fed rhetoric for the week pushed back on a near-term rate cut and suggested cuts later in the year as inflation concerns persist.  The probability of a rate hike in March and May is quite low, while a twenty-five basis point cut in June runs just under 70%.

West Texas Intermediate Crude prices fell 2.5% this week or $1.92 to 76.52 a barrel.  The pullback in prices comes as negotiations for a cease-fire in Gaza take place in Paris.  Gold prices increased by $24.10 to $2048.20 an Oz.  Copper prices rose by $0.05 to $3.88 per Lb. Bitcoin was trading just above the $51,000 mark.  The Dollar index fell by 0.3% to 103.94.

Economic news was fairly light this week but did show a continued tight labor market.  Initial Jobless Claims came in down 12k to 201K as Continuing Claims fell by 63k to 1.826M. Existing Home sales continued to be soft but the January figure came in line with estimates of 4M units.  Mortgage Applications fell by 10.6% as the 30-year mortgage rate eclipsed 7%.  A preliminary look at the S&P Global Service PMI showed a decline in Services activity to 51.3 from 52.5.  The FOMC minutes from the January meeting were consistent with what Fed Chairman Powell conveyed in his most meeting remarks.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 2/16/2024

-Darren Leavitt, CFA

Wall Street took a breather last week as hotter-than-expected inflation data forced investors to recalibrate their expectations for rate cuts from the Federal Reserve.  Mega-cap issues that have been responsible for most of the rally seen over the last year took a back seat as Microsoft and Amazon had notable declines.  The market has been on a tear, and some, me included, think a pullback is warranted and could actually be healthy for the market.  The fourth quarter earnings season has so far produced better-than-expected results. While some commentary from corporate leaders has been cautious, investment analysts are forecasting nearly 11% earnings growth for 2024.  That said, valuations look stretched here, with the forward 12-month P/E ratio trading just over 20 times.  According to Factset, the 5-year average forward 12-month P/E ratio is 19, while the 10-year average is 17.7.

The Consumer Price Index and Producer Price Index highlighted the economic calendar with both coming in higher than expected.  The CPI increased by 0.3% in January versus the expectation of 0.2%.  On a year-over-year basis, the reading was up 3.1% relative to 3.4% in December.  The core reading that excludes food and energy was up 0.4% in January versus the street estimate of 0.2 and was up 3.9% over last year, flat with the December reading.  Headline PPI came in at 0.3%, above the forecast of 0.1%, while the core reading increased by 0.5%, well above the consensus estimate of 0.1%.  On an annualized basis, the headline number was flat at 0.9%, while the core reading increased to 2% in January from 1.7% in December.  Retail sales showed a tempered consumer.  January sales were down 0.8% versus an estimate of -0.1%.  Ex-autos sales were down 0.6% versus the street consensus of 0.2%.  Initial claims fell by 8k to 212k, while Continuing Claims rose by 30k to 1.895M.  Housing Starts and Building Permits were lower than expected coming in at 1.331M and 1.47M, respectively.  The first look at the University of Michigan’s Consumer Sentiment index showed an increase of 79.6 from the prior reading of 79.3.

The S&P 500 declined by 0.4%, the Dow shed 0.1%, the NASDAQ lost 1.3%, and the Russell 2000 managed to gain 1.1%.  US Treasury sold off across the curve, sending yields higher.  The 2-year yield increased by fifteen basis points to 4.65%, while the 10-yield yield rose by eleven basis points to 4.30%.  Interestingly, the probability of a rate cut in May has now fallen to 34.1%, and the likelihood of a rate cut by June sits at 75.4%.

Oil prices increased by 2.1% or $1.62 with WTI closing at $78.44 a barrel.  Gold prices fell by $14.20 to close at $2022.10 an Oz.  Copper prices increased by 4% or $0.15 to $3.83 per Lb.  The US Dollar index gained 0.2% to close at 104.28 with notable weakness in the Japanese Yen.   Bitcoin traded north of $52k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 2/9/2024

-Darren Leavitt, CFA

The S&P 500 hit another record high and topped the 5000 level for the first time as investors focused on better-than-expected Q4 earnings.  The economic calendar was light this week but showed continued strength in the economy.  That strength gave reason to sell US Treasuries and further recalibrate the timeline for the Federal Reserve to start cutting rates.  Interestingly, the sell-off in Treasuries coincided with solid 3, 10, and 30-year auctions this week.

Fourth-quarter earnings continued to roll in this week with a skew to better-than-expected results.  Outsized moves in ARM holdings, Palantir, and Cloudflare propelled shares across the technology spectrum, especially the semiconductor sector.  This week, Eli Lilly, CVS, DuPont, Chipotle Mexican Grill, Ford, Caterpillar, and Disney were winners.  Amgen, Pepsi, PayPal, and McDonalds had disappointing results.

ISM Services headlined the economic data this week.  The report showed an acceleration in the services sector, constituting about 75% of the US economy.  January Services increased to 53.4 versus the street consensus of 51.7 and increased from 50.5 in December.  Initial Jobless Claims fell by 9k to 218k, while Continuing Claims fell by 23k to 1871k.  The Bureau of Labor Statistics also released their seasonally adjusted revisions for the Consumer Price Index which showed a slight downtick on the December headline reading to 0.2% from 0.3%.

The S&P 500 gained 1.4%, the Dow was flat, the NASDAQ increased by 2.3%, and the Russell 2000 led with a gain of 2.4%.

Despite decent demand for US Treasuries in 3 auctions this week, US Treasuries sold off across the curve.  Hawkish comments from Powell and other Fed officials echoed the need for more evidence that inflation is moving toward their 2% mandate. The 2-year yield increased by twelve basis points to 4.50% while the 10-year yield increased by sixteen basis points to close at 4.19%.  The higher move in yields decreased the probability of a May rate cut from just over 73% a week ago to 60.7%.

Oil prices surged 6.3% or $4.50 to $76.82.  Middle East tensions continued as Israel’s Prime Minister, Benjamin Netanyahu, dismissed a plan for a prolonged cease-fire in Gaza. Tensions were also catalyzed by a US strike on Iranian proxies in Iraq that reportedly killed the militia leader behind the attacks that killed three American soldiers in Jordan last month.  Gold prices fell by $15.30 to close at $2038.30 an Oz.  Copper prices fell by $0.14 to $3.68 per Lb.  Of note, Bitcoin eclipsed the 47k level for the first time since the SEC approved several spot Bitcoin ETFs.  The US Dollar Index increased by 0.2% this week to close at 104.11.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

It was a turbulent week on Wall Street as investors assessed the Federal Reserve’s decision on monetary policy while economic data and corporate earnings offered mixed results.   Tensions in the Middle East escalated as the US hit Iranian proxy assets in multiple countries, even as reports suggest a cease-fire in Gaza was imminent.

The January FOMC statement came in pretty much as expected.  There was no change to the policy rate, and a balanced tone on the path for rates that will be measured on the economic data received over the coming months.  However, the feedback from Chairman Powell post statement was more hawkish than expected and catalyzed a sell-off in the equity and Treasury markets.  The Chairman pushed back hard on the notion of a rate cut in March and insisted it was too soon to declare a victory on the inflation front.  The probability of a rate cut in June fell to ~20% from nearly 50% at the end of last week on Powell’s push back and on a much stronger than expected Employment Situation Report.  The probability of a May cut fell to 74% from 93.8% in the same time frame.

The January Employment Situation report showed an increase of 353K non-farm payrolls more than double what had been expected.  The Unemployment rate stayed steady at 3.7%, which was less than the estimated 3.8%.  Average Hourly earnings increased by 0.6% in January, double the consensus estimate of 0.3%.  The Average work week declined to 34.1 hours from 34.4.  The robust payrolls report on Friday sent US Treasuries lower across the curve and induced a sell-off in the interest sensitive sectors of the equity market.  Interestingly, the stronger payrolls number came after a weaker than expected ADP number and a slight up tick in the job openings data.  The high frequency data of Initial Jobless Claims and Continuing Claims weakened last week as headlines showed substantial layoffs in corporate America.  The increase in wages on the Payroll report were tempered by the first look at Q4 Productivity, Unit Labor Costs and the Employment cost Index.  Productivity came in at 3.2% vs. 1.8% while Unit Labor Cost and the ECI came in less than the consensus estimates.  US manufacturing data was also better than expected coming in at 49.1 versus the estimate of 48.  The final reading of the January University of Michigan Consumer Sentiment index came in at 79, the best level since July of 2021.

Corporate earnings for the 4^th quarter continued to come in and surprise.  Meta was a standout this week, increasing over 20% after their earnings announcement and set a record for market cap gains in a single day.  Cost cutting measures propelled the company to better than expected results and the announcement of the company’s first dividend along with a 50 billion dollar stock repurchase order solidified the idea that the company is in a great position.  Meta also announced more cap-ex spending on its AI initiatives.  Microsoft, Google, Apple, and AMD also posted better than expected results but there was a sense that some of their recent price appreciation was already incorporated in their prices.  A Bloomberg headline described the differential in price action post earnings in the Magnificent 7 as “splintered” and I must agree.  Tesla and Apple have been laggards while the other 5 names continue to pull the indices higher.

The S&P 500 and Dow forged another set of record highs.  The S&P 500 gained 1.4% as did the Dow.  The NASDAQ advanced by 1.1% while the rate sensitive Russell 2000 lagged with a loss of 0.9%.  Oil prices cratered losing 7.3% or $5.77 to close at $72.07 a barrel.  Gold prices rose by 1.8% or $36.60 to $2053.60 an Oz.  Copper prices fell by 0.03 to $3.82 per Lb.  The US dollar Index climbed 0.4% to close at 103.54.  US Treasuries had a wild ride over the week.  Early trade saw yields decrease substantially only to be met with a strong sell off after the robust Employment Situation Report.  Despite the strong sell off on Friday the 2-year yield closed down by two basis points to 4.38% as the 10-year saw its yield decline by thirteen basis points to close the week at 4.03%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 1/26/2024

-Darren Leavitt, CFA

US equities inked another set of weekly gains on the back of mixed 4^th quarter earnings results and encouraging economic data.  The S&P 500 and Dow set new all-time highs. Dutch Semiconductor Company ASML reported solid results.   Netflix, Verizon, United Airlines, American Express, and IBM also posted better-than-expected results and traded higher after their earnings announcements.   Conversely, Tesla, Intel, Texas Instruments, DuPont, Kimberly Clarke, AT&T, and Johnson and Johnson reported disappointing results and sold off after their announcements.   Monetary policy decisions from the European Central Bank and the Bank of Japan were as expected, with no changes to policy rates with bankers signaling movement in policy in the coming months.  Donald Trump won the New Hampshire primary, but Nikki Haley decided to remain in the Presidential race despite the victory.

The S&P 500 increased by 1.1%, the Dow rose 0.6%, the NASDAQ added 0.9%, and the Russell 2000 advanced 1.7%.  Action across the yield curve was mixed.  The front end of the curve was slightly bid while longer-tenured Treasuries were sold.  The 2-year yield declined five basis points to 4.36%.  The 10-year yield increased by one basis point to 4.16%.  Oil prices rallied by 6.2% or $4.60, with WTI closing at $78.04 a barrel.  The strong move came after China announced additional stimulus measures with reduced bank reserve requirements that could increase economic activity and oil demand.  Gold prices declined $12.20 to close at $2017 an Oz.  Copper prices increased by $0.06 to $3.85 per pound.  The US Dollar index gained 0.2% to close at 103.43.

A preliminary read on 4^th quarter GDP was much more robust than expected coming in at 3.3% versus an estimated 2% growth rate.  The GDP Price Deflator also showed a more significant decrease in inflation at 1.5% vs. the expected 2.8%.   Headline PCE and Core PCE came in as expected at up 0.2% month over month, but on a year-over-year basis, the headline number was flat at 2.6% while the Core reading fell from 3.1% in November to 2.9% in December.  Personal Spending showed a resilient consumer that spent 0.7% in December versus the expectation of 0.4% figure.  Personal Income came in as expected at 0.3%.  The S&P Global US Manufacturing and Services PMIs showed expansion for both sides of the economy.  Initial Unemployment claims ticked higher by 25k to 214k, while Continuing Claims increased by 27k to 1833k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 1/19/2024

-Darren Leavitt, CFA

The S&P 500 and Dow Jones Industrial Average hit record highs on Friday despite a reset of monetary policy rate cut expectations.  Mega-cap technology issues outperformed with a jump start from the influential semiconductor sector.  Taiwan Semiconductor showcased better-than-expected results and provided an upbeat outlook largely on the back of the outlook for more artificial intelligence spend from global corporations.  NVidia hit all-new highs after Meta announced that they would spend hundreds of millions on NVidia products.  The news propelled the Philadelphia Semiconductor Index to an 8% weekly gain.

The World Economic Forum in Davos, Switzerland, was also in motion last week and generated headlines around AI, the geopolitical environment, climate change, and the global economy.  Rhetoric at the event from central bankers pushed back on an imminent need to cut rates and stressed the need to get inflation in check.  Robust US economic data reported throughout the week helped bolster the argument to delay rate cuts. US sovereign debt investors heeded the speech-making and data and sold treasuries across the curve.  Just last week, the probability of a rate cut by the Federal Reserve in March stood at ~80%. A week later, that probability had been reduced to just over 45%.  Higher rates hurt the interest-sensitive sectors of the market while keeping a broader rally in check.

Tensions in the Middle East continued to flare up as the US and UK increased their efforts against the Houthi rebels in the Red Sea.  Iran and Pakistan also exchanged missiles, which highlighted the many different conflicts that exist in the region.  Additionally, it has been reported that Israel has conducted a strike in Syria that has killed several Iranian Republican Guard leaders.

The US government kicked the can down the road to avoid a government shutdown again while former President Donald Trump ran away with the Iowa Caucus.

The S&P 500 gained 1.2% on the week, the Dow climbed 0.7%, the NASDAQ jumped 2.3%, and the Russell 2000 shed 0.3%.  The 2-year yield increased by twenty-six basis points to 4.41% as the 10-year yield rose by twenty basis points to close at 4.15%.  Increased tension in the Red Sea provided a floor for oil with WTI prices inching higher by $0.81 to $73.44 a barrel.  Gold prices fell 1% or $22.40 to $2029.20 an Oz.  Copper prices increased by $0.09 to 3.79 per Lb.  Interestingly, Bitcoin and its proxies sold off over the week as investors assessed several new spot Bitcoin ETFs.  The US Dollar index climbed 0.9% to 103.22.

US Retail Sales in December were stronger than expected.  The headline number came in at 0.6% versus the consensus estimate of 0.5%, supporting the notion that the US consumer is doing just fine.  Initial Unemployment Claims came in at 187k, well below expectations, as Continuing Claims fell by 28k to 1.806m.  A preliminary look at the University of Michigan’s Consumer Sentiment survey was much stronger than anticipated. The figure came in at 78.8 versus the expected 69.4.  The housing market data was mixed.  Housing starts were better than expected at 1460k as were Building permits that came in at 1495k.  Existing Home Sales came in a bit light at 3.78m.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 1/12/2024

-Darren Leavitt, CFA

US Markets gained ground in the second week of 2024, attributed to mega-cap issues in the Information Technology and Communication Services sectors.  The Equal-weight S&P 500 was up 0.2%, while the Mega-Cap index was up 3.9%.  Notably, the S&P 500 touched its all-time high before giving some of those gains back on what was perceived to be a lackluster start to Q4 earnings.  JP Morgan, Citibank, Wells Fargo, and Bank of America kicked the earnings season off, but the results were blah, and the outlook was cautious.  Semiconductor company Microchip’s outlook was dim, as was the outlook of Delta Airlines, and both companies fell after their earnings announcements.  Boeing endured a tough week as the company’s CEO acknowledged that the company was in error for loose bolts related to last weekend’s Alaska Air incident.  The stock fell nearly 13% on the week.

Fed rhetoric was decidedly hawkish this week as Fed Presidents Williams and Mester pushed back on the notion that the Fed will be cutting rates at their March meeting.  The Economic calendar was centered on inflation data that came in with mixed results.  Interestingly, the probability of a March rate cut increased to just under 80% from 68% in the prior week.  Of note, the SEC approved several Spot Bitcoin ETFs that were up and trading the day after the announcement.  Bitcoin and many of its proxies sold off after the announcement, suggesting some of this action was already priced in.

The S&P 500 gained 1.8%, the Dow added 0.3%, the NASDAQ outperformed by tacking on 3.1%, and the Russell 2000 was unchanged for the week.  US Treasuries rallied across much of the yield curve, with shorter-tenured paper outperforming longer-duration paper.  The 2-year yield fell twenty-four basis points to 4.15%, while the 10-year yield fell by nine basis points to 3.95%.  Oil prices declined, but the sell-off was smaller than one might have expected, given the announcement that the Saudis were cutting prices and considering increasing production.  The news may have been less impactful, given increased tensions in the Red Sea where the US and UK, in a joint effort, targeted Houthi assets in Yemen.  Gold prices were little changed at $2051.60 an Oz.  Copper prices fell by $0.07 to 3.74 per Lb.  The US Dollar index was steady at 102.41.

The Consumer Price Index (CPI) was slightly hotter than expected.  The headline number was up 0.3% in December versus the street estimate of up 0.2%.  On a year-over-year basis, the figure rose 3.4% in December from 3.1% in November.  Core CPI, which excludes food and energy, also rose 0.3%, above the 0.2% consensus estimate.  On an annual basis, the figure rose 3.9% in December, down from 4% in November.  Shelter prices continued to rise and made up nearly half of the price gains.  Wholesale prices showed much more improvement.  The Producer Price Index (PPI) fell .01% in December versus the expectation of a 0.1% increase.  Core PPI came in flat relative to the street’s expectation for a 0.2% gain.  The labor market continued to shine.  Initial claims came in at 202k, while continuing claims were down 34k to 1.834m.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 1/5/2024

-Darren Leavitt, CFA

After nine weeks of gains, the market fell in the first week of trading in 2024.  Interestingly, the losses incurred this week largely came from areas of the market that outperformed last year, namely growth and technology.  Technically, the market was due for a pullback. Still, several factors catalyzed the sell-off this week, including multiple analyst downgrades of Apple, a more hawkish than expected tone from the Federal Open Market Committee minutes, increased geopolitical tensions in the Red Sea, and a stronger than anticipated jobs report.

The largest company in the world, Apple, fell over 6% as Barclays and Piper Sandler downgraded their rating to underweight and neutral, respectively.  Worries over higher inventories of iPhones, elevated valuations, and antitrust concerns were prominent themes in the downgrades.  The sell-off hindered the mega-cap index, which lost 3% for the week.

The FOMC was watched much more intently this week as investors looked for clues on what caused Chairman J. Powell to come off as so dovish in his post-FOMC meeting Q&A, where it appeared that he did a 180-degree turn from his prior hawkish statements.  The minutes provided a more balanced tone and perhaps was less dovish than the market had been looking for.  That sense pulled back expectations for a March rate cut and catalyzed some selling across the yield curve.

The presence of an Iranian destroyer in the Red Sea has increased concerns that the Israel and Hamas war could be broadening out.  Military strikes in Beirut that killed the Hamas leader of the West Bank, along with the bombing that killed over 100 people at a ceremony celebrating an Iranian Military official, increased tensions further.  As I write, there are reports that Hezbollah has fired a barrage of rockets into Israel.  This comes as Secretary of State Blinken tries to de-escalate the situation.

The S&P 500 fell by 1.5%, the Dow lost 0.6%, the NASDAQ gave back 3.3%, and the Russell 2000 shed 3.8%.  US Treasuries across the curve were sold.  The 2-year yield increased by fourteen basis points to close at 4.39%, while the 10-year yield increased by sixteen basis points to close at 4.04%.  Oil prices increased by 2.6% or $1.89 to $73.73 a barrel.  Gold prices fell by $21 to $2051.30 an Oz.  Copper prices fell to $3.81 per Lb., down $0.09.  Bitcoin topped 45k but then receded to close at just under 44k.  The US Dollar index gained 1% this week.

The economic calendar was packed in the first week of 2024 and highlighted by a stronger than anticipated Employment Situation report.  Non-farm payrolls increased by 216k more than the consensus estimate of 175k.  Similarly, Private Payrolls increased by 164k vs. the forecast of 132k.  The Unemployment rate remained at 3.7%, less than the expected 3.8%.  Average hourly earnings increased by 0.4% and were up 4.1% year-over-year from 4% in November.  The Average work week came in at 34.3 vs. the estimate of 34.4.  Jolts data showed fewer job openings in December, at 8.79m, down from 8.852m in November. Initial Jobless Claims and Continuing Claims reinforced the resiliency of the labor market.  Initial claims fell to 202k, and Continuing Claims fell by 20k to 1855k.  ISM Manufacturing remained in contraction at 47.4 but was better than the prior reading of 46.7.   ISM Services showed the service sector slowing.  Services fell to 50.6, down from November’s 52.7.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/22/2023

-Darren Leavitt, CFA

US equity markets inked an 8^th consecutive week of gains as investors continued to foster the soft landing narrative.  Trading volumes lightened as the week progressed and corporate news was relatively quiet.  A takeover bid for US Steel from Nippon Steel catalyzed markets on Monday, and better-than-expected earnings from Micron Technologies extended gains in the semiconductor sector later in the week.  The economic calendar was full and featured the release of the PCE, the Fed’s preferred measure of inflation.  Geopolitical tensions increased as the Israel/Gaza conflict induced cargo ship companies to reroute their ships from the Red Sea as the Iranian-backed Houthis continued to attack tankers in the region.

The S&P 500 gained 0.8%, the Dow rose 0.2%, the NASDAQ increased by 1.2%, and the Russell 2000 led gains with a 2.5% advance.  US Treasuries on the front end of the curve were bid higher while longer tenures sold off slightly.  The 2-year yield fell ten basis points to 4.33%, while the 10-year yield decreased by two basis points to 3.90%.  Oil prices increased by 3.2% or $2.35 to close at $73.75 a barrel.  Gold prices increased by $34.90 to $2069.80 an Oz.  Copper prices rose by $0.02 to $3.90 per Lb.  Bitcoin continued to hold on to its recent gains, closing at $43,480.

The PCE index came in at 0.1%, the first decline in PCE since 2020. The headline figure decreased to 2.6% on a year-over-year basis in November from 2.9% in October.  The Core PCE came in at 0.1% versus the consensus estimate of 0.2%.  The Core reading declined year-over-year to 3.2% from 3.4% in October.  Personal Income came in at 0.4%, less than the 0.5% estimate.  Personal Spending was up 0.2% but fell shy of the consensus estimate of 0.4%.  Sentiment indicators were better than expected.  Consumer Confidence rose to 106 from 104, while the University of Michigan’s Consumer Sentiment index increased to 69.7 in December from 61.3 in November.  Most of the gains in sentiment came from a decline in inflation expectations.  Initial Jobless claims increased by 2k to 205k as Continued Claims fell by 11k to 1865K.  Housing Data reported during the week was mixed.  Existing Home Sales came in line with estimates, New Home Sales came in less than expected, Housing Starts topped estimates, and Building Permits came in a bit light.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/15/2023

-Darren Leavitt, CFA

The Bull market continued its rally streak to seven consecutive weeks, something not seen since 2017.  Wall Street threw a “pivot party” as the US Federal Reserve’s Open Market Committee meeting ended with a surprisingly dovish tone.  As expected, the Fed kept its policy rate unchanged at 5.25%-5.50%, but the updated Summary of Economic Projections now shows a median expectation of three rate hikes in 2024, up from two.  The SEP also showed better economic growth prospects and lowered inflation expectations.  In the post-meeting Q&A, Fed Chairman Jerome Powell’s dovish demeanor seemed the opposite of his hawkish tones from just two weeks ago.  Chairman Powell also conveyed that the FOMC had discussed the prospect of cutting rates at the meeting.

The markets loved the notion of the Fed’s dovish pivot and now have priced in six rate hikes in 2024.  The European Central Bank and the Bank of England also left their rates unchanged but struck a much more restrictive tone in their post-meeting Q&A.  South Korea’s central bank and the Hong Kong Monetary Authority left their rates unchanged. They suggested that more rate hikes may be needed to combat inflation, while the Norges bank raised rates by 25 basis points and telegraphed the need for more hikes in the future.    The Bank of Japan’s meeting is this week, and investors will closely watch it to see If Japan will indeed move away from its negative rate policy.

The S&P 500 gained 2.5%, the Dow rose 2.9%, the NASDAQ increased by 2.8%, and the Russell outperformed for the third week, gaining 5.5%.  US Treasuries rallied across the curve sending the 10-year yield south of 4%.  The 2-year yield decreased by twenty-eight basis points to 4.46%, while the 10-year yield plunged by thirty to close at 3.93%.  The lower yields catalyzed a sell-off in the US dollar, with the DXY falling 1.484% on the week.  Oil prices ended little changed this week, gaining $0.22 to close at 71.40 a barrel.  Gold prices increased by $20.20 to $2034.90 an Oz.  Copper prices rose by a nickel to $3.88 per Lb.

The economic calendar was full this week and, for the most part, continued to support a soft landing narrative.  The Consumer Price Index increased by 0.1% from last month, slightly above the estimate of 0%.  On a year-over-year basis, prices increased by 3.1%, down from the 3.2% reading in October.  The Core CPI, which excludes food and energy, increased by 0.3% versus the consensus estimate of 0.2%.  On a year-over-year basis, the reading came in at 4%, unchanged from October.  Shelter prices continued to rise but are expected to fall off over the next few months.  The Producer Price Index or PPI was flat month over month and was up 0.9% in November, down from October’s print of 1.2%.  Core PPI was also flat versus the expectation of 0.2%.  Core PPI rose 2% YoY, down from 2.3% in the prior month. Bottom line- inflation continues to come down.  November Retail sales increased by 0.3%, above the expected 0.1%.  Ex-Autos, Retail Sales increased by 0.2%, in line with forecasts.  The bottom line is that the consumer continues to spend.  Initial Jobless claims fell by 19k to 202k, while Continuing Claims increased by 20k to 1876k.  MBA Weekly Mortgage Applications increased by 7.4% as interest rate declines induced activity.  Industrial Production was up 0.2% vs. an expected 0.3%.  Capacity Utilization came in at 78.8, slightly lower than the anticipated 79.2.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/8/2023

-Darren Leavitt, CFA

The S&P 500 gained ground for the sixth consecutive week as US economic data continued to support the soft landing narrative.  Mega-cap issues provided leadership, while small-caps continued to perform relatively well, showing a broadening out of the equity rally.  The introduction of Alphabet’s AI initiative, Gemini, propelled shares higher by 5% on Thursday.  Similarly, AMD launched its MI300 product and announced that Meta and Oracle would be new customers and that Microsoft would continue to use their technology.  Investors sent AMD stock higher on the notion that AMD is well-positioned to participate in AI growth.  The announcement pushed the Philadelphia Semiconductor Index higher on the week.

International markets were mixed this week as Moody’s cut China’s credit outlook from stable to negative.  In Japan, BOJ rhetoric suggested again an end to its negative interest rate policy which rallied the Yen but catalyzed a sell-off in Japanese equities.  The Israel-Hamas war continued, with Israel claiming to have killed five military leaders of Hamas.  The reescalation of the war prompted a proposal by the UN for a ceasefire, but the United States blocked the proposal.  The US Senate voted down more funding for Ukraine and Israel as the far right demanded changes to border security policy.

The S&P 500 increased by 0.2% and established a new 52-week high.  The index is up 11.8% in six weeks.  Mega-caps rose by 0.9%, while the equally weighted S&P 500 was flat for the week.  The Dow Jones Industrial Average was also flat for the week.  The NASDAQ ticked higher by 0.7%, while the small-cap-focused Russell 2000 continued to lead with a 1% advance.

Price action across the US yield curve was mixed.  Shorter-tenured US Treasuries took the brunt of the sell-off that occurred on Friday after a stronger-than-expected Employment Situation Report hastened a rethink of the Fed cutting rates in the first quarter of 2024.  For the week, the 2-year yield increased by eighteen basis points to 4.74%, while the 10-year yield increased by two basis points to 4.25%.  As yields increase bond prices fall.

Oil prices continued to fall as concerns about global growth persisted, and questions remained about the compliance of OPEC+’s production cuts.  WTI prices decreased by 3.5% or $2.56 to $71.18 a barrel.  It’s worth noting that further weakness may be curbed somewhat by the announcement that the US will start to buy back oil for the Strategic Petroleum Reserve.  Gold prices fell by $75 to close at $2014.70 an Oz.  Copper prices decreased by $0.10 to $3.83 per Lb.  A stronger dollar likely influenced commodity prices as the Dollar Index gained 0.8% to close at 104.01.

A robust November Employment Situation Report headlined the economic calendar.  Non-farm payrolls increased by 199k versus the consensus estimate of 175k and above the October reading of 150k.  Private Payrolls increased by 150K- the street was looking for 155K.  The Unemployment rate surprised to the downside at 3.7%, a regression from the prior print of 3.9%.  Average Hourly Earnings ticked higher by 0.4% the consensus estimate was for an increase of 0.2%.  The Average Workweek increased to 34.4 from 34.3.  The report pushed back on the Fed cutting rates in the first quarter of 2024, although Fed Funds Futures still assign a 78.6% probability of a May 2024 rate cut.  Initial claims were up 1k to 220k, while Continuing Claims fell by 64k to 1.861M.  JOLTS data, which shows available job openings, declined to 8.733m- the lowest level since March 2022.   ISM Services data showed an uptick in the Service Sector.  The reading came in at 52.7 from 51.8 in October.  Q3 Productivity increased by 5.2%, above the consensus estimate of 4.8%.  Q3 Unit Labor Cost decreased by 1.2%.  Finally, the preliminary reading of the University of Michigan’s Consumer Sentiment came in well above consensus at 69.4 as inflation expectations waned.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/1/2023

-Darren Leavitt, CFA

A mélange of factors pushed US equity markets to a sneeze away from record highs.  US Treasuries continued to rally, sending yields lower across the curve.  The soft landing narrative continued as investors digested economic data that showed moderating inflation alongside a resilient labor market and stronger than expected GDP growth rate in the third quarter.  Investors seemed to dismiss multiple Fed Speakers’ suggestions that it was premature to start considering rate cuts.  However, Fed Funds futures suggest a 63.4% probability of a cut by March and nearly a 90% chance of a cut by May.  The Fed has now gone into its quiet period ahead of the December FOMC meeting, where it is widely expected that they will keep their policy rate unchanged.  However, the meeting will telegraph the Fed’s most recent views on the dot plot which shows each member’s projection of the policy rate.  If these projections are meaningfully different from what is currently priced in the market, investors may be inclined to sell the current rally which currently looks a bit overbought.

The S&P 500 gained 0.8% while the equally weighted S&P 500 index outperformed, gaining 2.5%.  The S&P 500 sits just below its 52-week high of 4607.07, closing at 4594.63.  The Dow added 2.4%, the NASDAQ increased by 0.4%, and the Russell 2000 jumped 3.1%.  US Treasuries continued to rally with shorter-dated tenors acting a bit better.  The 2-year yield fell thirty-nine basis points to 4.56%, while the 10-year yield decreased by twenty-four basis points to 4.23%.

Oil prices continued to struggle despite the announcement by OPEC+ that they would reduce production by 2.2 million barrels per day.  The delayed meeting left investors questioning if OPEC+ has the ability to cut further if prices continue to decline, and it also left question marks on compliance with the announced cuts.  West Texas Intermediate fell $1.14 or 1.5% on the week to close at $74.04 a barrel.  Gold prices continued to rally, increasing by 4% or $86.30 to close at $2089.70.  Copper prices increased by over 8% to $3.93 a Lb.  Bitcoin rallied on news that the SEC and Blackrock had meetings to discuss Blackrock’s application to launch a spot Bitcoin ETF- Bitcoin is trading a $39,500 as I write.  The dollar index lost 0.1% on the week.

Economic data for the week was headlined by the Fed’s preferred measure of inflation, PCE.  PCE came in flat on a month-over-month basis, slightly lower than the consensus estimate of 0.1%.  The measure increased by 3% year-over-year, down from September’s 3.4% advance.   Core PCE came in line with expectations at 0.2% and also showed moderation on a year-over-year basis of 3.5%, down from 3.7% in September.  The decline in core prices is encouraging but is still well above the Fed’s target of 2%.  Personal Income and Spending came in line with expectations at 0.2%.  The 2^nd estimate of third-quarter GDP surprised to the upside with a reading of 5.2% growth.  The GDP price Deflator came in as expected at 3.6%.  Consumer Confidence was a bit better than expected at 102 versus 100.  ISM Manufacturing came in at 46.7, which shows the manufacturing sector is still in contraction.  New Home sales came in below estimates at 679k, while the S&P Case Shiller Home price index increased by 3.9%.  Initial Jobless Claims rose by 7k to 218k, while Continuing Claims increased by 86k to 1927k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 11/24/2023

-Darren Leavitt, CFA

US equity markets inked a 4^th straight week of gains despite the market appearing to be overbought.  The holiday-shortened week featured light trading volumes and broad participation.  Earnings results from AI Chip maker NVidia were absolutely stellar, however, the results were met with selling pressure.  The stock had advanced nearly 25% in four weeks and the move post earnings may be indicative of what we should start to expect from the broader market.  Earnings results for a number of retailers were mixed, but on the margin fostered the sense that the consumer is still quite resilient.  The markets will be interested to see how Black Friday Sales come in, with preliminary data suggesting flat results over last year.  Israel and Hamas agreed to a four-day cease-fire as they exchanged hostages and prisoners.  Oil prices were little changed on the news but did react to news that the OPEC+ meeting would be delayed as some members apparently disagreed with another tranche of production cuts.

The S&P 500 gained 1% for the week and is up 10.6% over the last four weeks.  The Dow added 1.3%, the NASDAQ increased by 0.9%, and the Russell 2000 rose by 0.5%.  Mega Caps gained 1.2%, while the S&P 500 equal-weighted index increased by 1%.  US Treasury yields increased across the curve but the moves were rather subdued compared to the last several weeks.  The 2-year yield increased by five basis points to 4.95%, while the 10-year yield rose by three basis points to 4.47%.  Minutes from last month’s FOMC meeting offered investors a reiteration of the Fed’s current data-dependent stance.

Oil prices decreased by $0.82 to close at $75.18 a barrel.  Gold prices reclaimed the $2000 threshold, gaining $18.90 to close at $2003.40 an Oz.  Copper prices increased by 0.05 to $3.79 a Lb.  The dollar index lost ground again this week as the Euro, Yen, Yuan, and British Pound all gained against the greenback.

The Economic calendar was fairly light.  October leading indicators declined by 0.8%, slightly lower than the consensus estimate of -0.7%.  October Existing Home Sales came in lighter than expected at 3.79 million as higher mortgage rates and lack of supply hindered sales.  Durable Goods orders also came in lighter than expected at -5.4%- the street was looking for -3.1%. Initial Jobless Claims fell by 24k to 209k while Continuing Claims fell by 22k to 1.840 million.  The final November reading of the University of Michigan Consumer Sentiment Index came in at 61.3 versus the October reading of 63.8.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 11/17/2023

-Darren Leavitt, CFA

The S&P 500 closed above 4500 after inking its third consecutive weekly gain.  Temperate economic data released over the last few months has elevated the idea of an economic soft landing and the idea that the Feds rate hike cycle is behind us.  In Fact, Fed Funds Futures currently price 0% probability of another rate hike and have pushed up the timeline for a cut to May of 2024 from July. Fed Speak over the week was cautiously optimistic, with some officials concurring that rates have peaked while others pointed to inflation levels that are still well above the Feds mandate of 2%.  The Government was able to avoid a shutdown with the passing of a stop-gap spending bill that will kick the final decision down the road.

President Biden and Chinese President Xi Jinping met in San Francisco at the APEC conference. Both leaders agreed to reengage military communications and to combat the trafficking of illegal drugs.  Third Quarter earnings results highlighted several retailers.  The results were mixed, with Target, Ross, and Macy’s announcing better-than-expected results, while Walmart and BJ Wholesale Foods showed disappointing results.

The S&P 500 advanced 2.2%, the Dow added 1.9%, the NASDAQ climbed 2.4%, and the Russell 2000 jumped 5.4%.  The S&P 500 is up 9.6% over the last three weeks.  A broadening out of the equity market returned this week. The market cap-weighted S&P 500 posted a 2.2% gain, while the equal weight index advanced 3.4%.  The mega-cap growth ETF was up 2.1%.

US Treasuries advanced across the curve as the Core Aggregate Bond Index crossed into positive territory for the year.  The 2-year yield fell by fifteen basis points to 4.90%, while the 10-year yield decreased by nineteen basis points to 4.44%.

Oil prices continued to be under pressure due to supply concerns in a softening global economy.  Late in the week, there was speculation that OPEC may announce additional production cuts at their November meeting.   WTI prices fell for the fourth straight week losing 1.6% to close at $76 a barrel.  Gold prices increased by $45.40 to close at $1984.5 an Oz. Copper prices increased by $0.15 or 4% to $3.74 a Lb.  The dollar index lost 1.8% on the week to close at 103.62 and is now flat for the year.

A weaker-than-expected Consumer Price Index report highlighted economic news.  Headline CPI was flat in October and came in at 3.2% year-over-year, down from 3.7% in September.  Core CPI came in at 0.2% versus the expectation of 0.3% and fell to 4% from 4.1% year-over-year.  The results instantly put a bid into the equities and US Treasuries. Food prices were up 0.3%, and Shelter prices increased by 0.3%.  Energy prices fell 2.5% over the month of October and were down 4.5% from the same time last year.  The Producer Price Index also showed wholesale prices moderating.  The headline number came in at -0.5% versus an expectation of 0.1%.  Core PPI was flat versus the consensus estimate of 0.3%.  Retail Sales fell less than expected at 0.1%, while the ex-auto figure was in line at 0.1%.  Initial Claims ticked higher to 231k, while Continuing Claims increased by 32k to 1865k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 11/10/2023

-Darren Leavitt, CFA

Markets were mixed this week as investors digested additional earnings announcements, a plethora of Fed rhetoric, and a large dose of US Treasury issuance.  The divergence of mega-cap stocks widened relative to equally weighted indices, mid-cap issues, and small-caps.  Technology stocks were in favor, catalyzed by a solid report from Taiwan Semiconductor and news that NVidia will supply China chips that circumvent the current ban on technology exports to China.  The energy sector continued to be laggard due to fears of slower global growth.

The Israel- Hamas conflict continued with Israel encircling Gaza City. The US and Israel conducted airstrikes in Syria but markets seemed to shrug off the notion of a broadening conflict.  The global community continued to call for more humanitarian aid but fell short of calling for a ceasefire.  The economic calendar was light this week.

The S&P 500 climbed 1.3% on the week and closed above 4400.  The S&P 500 is up over 7% since the end of October and is up 15% year to date.  The Dow added 0.7%, the NASDAQ jumped 2.4%, and the Russell 2000 gave up 3.1%.  US Treasuries regressed after their stellar performance from a couple of weeks ago.  A horrible 30-year auction followed a decent 3-year and 10-year auction.  Shorter-tenured Treasuries fell more than longer-tenured bonds.   The 2-year yield increased by nineteen basis points to 5.05%, while the 10-year yield increased by seven basis points to 4.63%.  The commodity complex also faced selling.  Oil prices fell by $3.57 or 4.4% to $77.21 a barrel.  Gold prices lost $60.30 or 3% to close at $1939.10.  Copper prices decreased by $0.09 to $3.59 a lb.  Bitcoin closed north of $37,000 as investor enthusiasm toward a spot Bitcoin ETF approval continued.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

Global financial markets rallied big time last week on dovish tones from central bankers and on the notion that this interest rate hike cycle may be over.  The Bank of Japan kicked the week off with a vague move that sets their 10-year Japanese Government Bonds to a target range.  The move was less than the street expected and catalyzed the selling of the Yen and jump-started a rally in US Treasuries.  The Bank of England left its policy rate unchanged, but three BOE officials voted to increase it by twenty-five basis points.  As expected, the Federal Reserve left its policy rate at 5.25%- 5.50%.  A more dovish Jerome Powell explained that the Fed had come a long way and that the current policy rate was doing its job in tightening financial conditions.  Fed Funds futures indicate that there are no more rate hikes expected this year and signal a couple of rate cuts by the end of next year.

Third-quarter earnings continued to roll and on the margin helped market sentiment.  Apple’s earnings were a bit of a disappointment but markets shrugged the tepid results off and moved the market higher.  Coming into the week the S&P 500 had been in a technical correction (off just over 10% from the July highs).  This week saw massive gains that led the S&P 500 back above its 200-day moving average and above its 50-day moving average.  Investors will now wait and see if the market can hold these levels and move higher.

Economic data for the week included the Employment situation reports that showed fewer jobs created than expected.  Non-farm Payrolls increased by 150K versus the consensus estimate of 175k.  Private Payrolls increased by 99k versus the estimated 143k.  The Unemployment rate increased to 3.9% from 3.8% and Average Hourly earnings grew by 0.2%, which was lower than the expected 0.3%.  The weaker data helped foster the idea that the Fed is done raising rates.  Initial Jobless claims ticked higher as did Continuing Claims.  3^rd quarter Unit Labor Cost came in lower than expected at -0.8% while Q3 productivity surged by 4.7%.   ISM Manufacturing showed a further deceleration of manufacturing.  The ISM came in at 46.7, down from the prior reading of 49.

The S&P 500 gained 5.9%, the Dow jumped 5.1%, the NASDAQ inked a 6.6% advance, and the Russell 2000 increased by 7.6%.  The massive upside move in equities was fueled by an equally impressive move in US Treasuries.  The 2-year yield fell seventeen basis points to 4.86%, while the 10-year yield fell by twenty-nine basis points to close at 4.56%.  The move in rates hindered the US dollar, which fell by 1.4% on the week.  Oil prices traded lower by 5.6% or $4.75 to close at $80.78 a barrel.  Copper prices increased by 0.04 to $3.68 a Lb.  Bitcoin continued its recent advance closing north of $35,000 a coin.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

Equity markets faced another wave of selling as the S&P 500 went into correction territory, down 10.13% from the end of July.  Investors saw some relief from the bond market, but trade in Sovereign debt continued to lack a safe-haven bid quality and instead traded as rates would continue to be higher for longer.  That sentiment was reinforced by the European Central Bank when they left their policy rate unchanged but telegraphed that restrictive policy would be in tack for the foreseeable future.  Goldman Sachs came out after the policy meeting and suggested that the ECB is done tightening but cuts will not be coming until the third quarter of 2024.

The Federal Reserve will meet this week, where it is widely expected that they will keep rates unchanged at 5.25%-5.50%.  Currently, there is only a 19.2% chance that the Fed will raise rates again this year.   Again, that safe-haven bid was not present in the bond market this week, even as tensions in the Middle East ramped up.  The US destroyed two Iranian targets in Syria as Israel sent tactical troops into Gaza, seemingly to prepare for a much larger ground campaign.  The conflict continues to be top of mind for investors as politicians search for a solution.  The US House of Representatives elected a new Speaker of the House.  Representative Mike Johnson from the State of Louisiana won the Speakership and has started working on a Stop-Gap measure to keep the government running through the end of the year and also proposed a bill to provide support to Israel.   Currently, funding for Ukraine has been sidelined.  Q3 earnings were mixed and seemed to garner more attention this week than in the prior few weeks.  Google’s cloud numbers were disappointing and sent the stock lower by 9.8% despite the rest of their business showing solid results.  Microsoft and Amazon had solid quarters and did much better with their cloud service offerings.  Intel surprised the street and helped propel the Semiconductor sector with solid results from a significant increase in margins.  Verizon, Coca-Cola, and Raytheon posted solid numbers, while Meta, Exxon Mobil, and Chevron earnings results were disappointing.

The S&P 500 lost 2.5%, the Dow gave up 2.1%, the NASDAQ fell 2.6%, and the Russell 2000 shed 2.6%.  The S&P 500 equal weight, and market cap indices fell in tandem.  US Treasury yields were consistently lower across the curve.  The 2-year yield fell by six basis points to 5.03%, while the 10-year yield fell by seven basis points to 4.85%.  Oil prices fell $2.52 or 2.8% to $85.53 a barrel.  Gold prices were little changed, closing just below $2000 an Oz at $1998.70. Copper prices increased by $0.06 to 3.64 a Lb.

Economic data for the week included headline PCE, a little hotter than expected at 0.4% versus the estimated 0.3%.  The headline number increased 3.4%, unchanged from August.  Core PCE came in at 0.3%, in line with expectations, and ticked slightly lower on a year-over-year basis to 3.7% from 3.8%.  Personal Income was a little shy of estimates at 0.3%, but Personal Spending came in at a robust 0.7% versus the expected 0.5%.  Perhaps the most interesting reading of the week came from the first assessment of 3^rd quarter GDP.  The data showed the US economy growing at a 4.9% rate.  Initial Jobless Claims came in at 210k, while Continuing Claims increased by 63k to 1790k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 10/20/2023

-Darren Leavitt, CFA

This week, the debt market resumed its sell-off and wreaked havoc on the equity markets.  The US 10-year bond yield hit 5% for the first time since 2007, while longer-tenured issues felt the brunt of the sell-off. The move came despite increased tensions in the Middle East, where Israel plans a ground campaign into Gaza. Currently, it appears Israel is allowing more time to negotiate the return of hostages before entering Gaza.  However, US Treasuries that found a safe-haven bid in the prior week due to the geopolitical uncertainties- found no such cover this week.  The US Congress continued to be caught up in trying to elect a new Speaker.  Jim Jordan, a Representative from Ohio, could not secure the votes in three attempts.

Investors also heard hawkish tones from several Fed Officials who seemed content with the sell-off in the bond market. Mixed third-quarter earnings results featured Netflix, which soared after better-than-expected subscriber growth. Tesla fell short of expectations but reaffirmed its year’s production goals.  Regional Banks sold off on concerns over higher rates, and airlines sold off on higher fuel and labor cost projections.

The S&P 500 fell 2.4%, the Dow sank 1.6%, the NASDAQ shed 3.2%, and the Russell 2000 lost 2.3%. OF note, the S&P 500 closed below its 200-day moving average after failing to regain its 50-day moving average. The 2-year yield climbed by four basis points to 5.09%, while the 10-year yield increased by twenty-nine basis points to close at 4.92%.  Oil prices closed the week up a fraction at $88.05 a barrel.  Gold prices increased by 2.7% or $52.80 to $1994.30 an Oz. Copper prices were unchanged on the week at $3.56 a Lb.  The US Dollar index fell 0.5% to 106.16 as Bitcoin traded north of $30,000.

Economic news showed a resilient consumer as Retail Sales figures beat expectations.  The headline number came in at 0.7% versus expectations of 0.5%.  The Ex-Auto figure increased by 0.6% versus the consensus estimate of 0.3%.  The buoyant consumer must take solace in the strong labor market that showed only 198k in Initial Claims this week- the lowest figure since January.  Continuing claims increased by 29k to 1734k.  Existing home sales came in at 3.96 million, slightly better than expected but the lowest since October 2010.  Housing Starts came in at 1358k, and Building Permits were somewhat better at 1473k.  Economic Leading Indicators showed a negative reading for the 18th month. This coming week, investors will be focused on the Fed’s preferred measure of Inflation, the PCE, which will be announced on Friday.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 10/13/2023

-Darren Leavitt, CFA

US equity markets finished the week with mixed results as investors digested the first tranche of third-quarter earnings results. JP Morgan, Citi Bank, Wells Fargo, and United Healthcare had better-than-expected earnings. Investors were also focused on the Middle East, where the conflict between Israel and Hamas continues to warrant caution and hope of a diplomatic solution. The Biden Administration halted a 6 billion dollar payment to Iran and said it was considering more sanctions, while the Iranian Foreign Minister warned Israel and its allies “will face reactions on other areas,” suggesting perhaps a broader conflict. US Treasuries caught a safe-haven bid, lowering yields across the curve for the first time in several weeks. The move lower in yields came despite several central bankers indicating that rates were likely to be higher than longer, three US Treasury auctions that had soft demand, and economic data that showed a slight moderation in September inflation. The UAW broadened their strike to include a Ford plant in Kentucky even as the big three announced more layoffs. In Washington, the Republican-led house continued to be without a Speaker. Representative Scalise from Louisiana initially passed a preliminary vote but dropped out after the realization that he would not have enough votes to win Speaker.

The S&P 500 gained 0.4%, the Dow added 0.8%, the NASDAQ fell by 0.2%, and the Russell 2000 gave back 1.5%. US Treasuries found a haven bid. The 2-year yield fell by one basis point to 5.05%, while the 10-year yield fell by fifteen basis points to 4.63%. Oil prices rallied 5.2% or $4.40 to close at $87.40 a barrel. A safe-haven bid was also very noticeable in Gold, where prices increased by $96.40 to $1941.50 an Oz.  Copper prices fell by $0.08 to $3.56 a Lb.

The economic calendar was centered on Consumer and Producer Price data. The Consumer Price Index increased by 0.4% in September, slightly more than the consensus estimate of 0.3%. The headline number was unchanged from the August reading of 3.7% year-over-year. The Core CPI, which excludes food and energy prices, increased by 0.3%, in line with expectations. On a year-over-year basis, the Core number fell to 4.1% from 4.3% in August. Of note, over half the gain in CPI was attributed to shelter costs, which increased by 0.6% in September. Producer prices were hotter than expected on both the headline and core numbers. Headline PPI came in at 0.5% versus the consensus estimate of 0.3%. The headline reading increased by 2.2%, up from 1.6% in August. The Core measure increased by 0.3% versus the expected 0.2%, up 2.7% from 2.2% in August. The labor market continued to be tight, with Continuing Claims coming in at 207k while Continuing claims increased by 30k to 1.702 million.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 10/6/2023

-Darren Leavitt, CFA

Investors were treated to another mixed bag of market action as the yield curve steepened on the notion of higher rates for longer.  There were several central bank officials that echoed the need to perhaps raise rates another 25 basis points and then keep rates elevated through much of next year.  A surprisingly strong Employment Situation report propelled the idea of a soft landing, although many think the robust report will mark a top in employment.  Fed Funds futures now assign a 42.6% probability of another twenty-five-basis point rate hike by December of 2023. Oil prices plunged 8.12% on concerns over global growth.  The move in oil prices came despite Russia and Saudi confirming they would not change their current levels of production.

As I write, there is increased conflict in Israel and the Gaza Strip.  Israeli Prime Minister, Netanyahu, has declared his nation is at war.  The renewed conflict will without a doubt influence markets as Asia opens Sunday night.  US politics continues to be just crazy with the ousting of Speaker of the House this week in a 216 to 210 vote.  Republicans are now seeking another speaker who can lead a divided party.

The S&P 500 rose by 0.5%, the Dow gave up 0.3%, the NASDAQ increased by 1.6%, and the Russell 2000 lagged with a loss of 2.2%.  The yield curve continued to be sold with longer-tenured Treasuries taking the brunt of the sell-off.  The 2-year yield increased by two basis points to 5.06%, while the 10-year yield jumped twenty basis points to 4.78%.  The 2-10 spread compressed to twenty-eight basis points.  As I mentioned earlier, Oil prices plunged more than 8% or $7.38 with WTI closing at $83.04 a barrel.  Gold prices fell $22 to close at $1845.10 an OZ.  Copper prices declined by $0.09 to $3.64 a Lb.  The US Dollar declined slightly from the most recent highs as the Bank of Japan intervened to ward off more weakness in the Yen.

There was plenty of economic news to digest over the week.  The September Employment situation report showed blowout payroll numbers.  Non-farm payrolls increased by 336k well above the consensus estimate of 158K and had the prior two readings revised higher.  Private Payrolls rose by 263k also well above the consensus estimate.  The Unemployment rate stayed at 3.8%, slightly above the estimated 3.7%.  Average Hourly earnings increased by 0.2% versus expectations of 0.3%.  Average Hours per work week came in line with the consensus at 34.4.   Similarly, the JOLTS data showed an increase in jobs at 9.610M from the prior month’s 8.920M.  ADP Employment change ticked lower to 89k from 150k.  Initial claims came in at 207k and Continuing Claims fell 10k to 1.644M.  ISM Manufacturing continued to signal contraction but at a slower pace at 49.  ISM Services fell to 53.6 from 54.6 but still showed the services side of the economy in expansion.  This week we will see CPI data and PPI data.  Investors will also be interested to see the results of 3-year, 10-year, and 30-year Treasury auctions.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 9/15/2023

-Darren Leavitt, CFA

It was a roller coaster ride on Wall Street this week, with early-week gains met with a late-week sell-off.  Investors cheered the largest IPO of the year that saw Arm Holdings come to market 10x oversubscribed at a valuation north of $50 billion.  Apple’s new product launch was not enough to stop the selling pressure that started last week on concerns that the Chinese government would ban Apple products and curtail demand for iPhones.  Lackluster earnings from Adobe and a warning from Netflix on disappointing trends in advertising revenues further hindered the Mega-Cap Technology issues. Semiconductors were noticeably weak on TSM’s announcement that the company would slow production of its semiconductor equipment.

Additionally, several airlines cut their earnings estimates due to a sharp increase in fuel costs.  WTI crude increased $2.53 this week to close at over $90 a barrel. The ECB increased its policy rate for the tenth time in its rate hike cycle by 25 basis points.  However, the central bank signaled that it would pause to digest further data while letting its tightening policy work into the economy.  The dovish tone sent the Euro and British Pound lower against the dollar.  The United Auto Workers also went on strike as the Big Three and union leaders could not come to an agreement. It’s estimated that the strike could cost as much as 500 million a week until resolved.  The economic data released this week was highlighted by a material increase in headline CPI caused by the sharp increase in oil prices over the last couple of months.

The S&P 500 lost 0.2%, the Dow increased by 0.1%, the Nasdaq fell by 0.4, and the Russell 2000 gave up 0.2%.  The S&P 500 and Nasdaq broke below their 50-day moving averages, keeping the prospect of a larger sell-off in play.  The US Treasury market continued to sell off on concerns that inflation will continue to be elevated, forcing the Federal Reserve to keep rates higher for longer.  The 2-year yield increased by seven basis points to 5.04%, while the 10-year yield also increased by seven basis points to 4.33%.  Of note, these yields are a sneeze away from their cycle highs.  As I mentioned, oil prices continued to climb, closing at $91 a barrel.  Several analysts have increased their estimate of year-end crude prices to as much as $100 a barrel- another issue the Federal Reserve will need to incorporate into their inflation estimates.  Gold prices increased by $2.30 to $1945.60 an Oz.  Copper prices advanced by $0.08 to close at $3.80 a Lb.

Headline CPI came in at 0.6%, in line with expectations, and was up 3.7% on a year-over-year basis from the 3.2% registered in July.  Core CPI that excludes food and energy prices increased by 0.3% and was up 4.3% year-over-year but down from July’s year-over-year reading of 4.7%.  Producer prices increased by 0.7%, higher than the 0.5% estimate, while the Core number came in a bit lighter at 0.2%.  Retail Sales increased by 0.6%, much higher than the 0.1% estimate; however, the bulk of these gains came from gasoline sales that increased 5.2% on higher fuel costs.  Initial Claims increased to 220k for the week and were in line with estimates.  Continuing Claims increased by 4k to 1688k.  Next week’s data will highlight the housing market’s current state, and we will look at the August Leading Indicators.  The Federal Reserve will conclude its Open Market Committee on Wednesday afternoon, where it is widely expected that the central bank will keep its policy rate unchanged.  Investors will focus on the Fed’s Summary of Economic Projections for clues on the future path of interest rates and J Powell’s post-meeting comments.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

The holiday-shortened week ended with losses for both US equities and Treasuries.  Apple shares tumbled on the news that the Chinese government would ban the use of the iPhone at government agencies at all levels of government.  The news comes in front of Apple’s new product release scheduled for September 12^th.   Shares of Apple fell 6% on the week and other large-cap technology issues fell in tandem.  The ban on exporting technology to China may well have entered into a new phase with China taking similar measures against other multinational companies.  The consequences of protectionism and on shoring were prominent themes for investors last week and will likely be another variable for investors to consider.

Oil prices advanced again on the news that Russia and Saudi would continue to curtail their production of Crude through at least the end of the year.  The higher level of fuel costs has caused concern on the inflation front.  The US Consumer Price Index will be released this week and it’s widely expected that the headline number will tick higher from the prior reading due to elevated oil prices.  ISM Services reported during the week also showed that the services sector of the economy expanded at a higher rate and the prices in services ticked higher as well.  Sticky inflation data and an increase in the supply of debt coming to the market from the Treasury and Corporate America pushed yields higher across the curve.  This week the Treasury will auction off nearly 100 Billion in 3-year, 10-year, and 30-year paper.

The S&P 500 lost 1.3%, the Dow gave up 0.7%, the NASDAQ fell 1.9%, and the Russell 2000 led declines with a loss of 3.6%.  Of note, the S&P 500 fell below its 50-day moving average but was able to hold 4400 a key level that investors will continue to watch.  The yield curve shifted higher across the curve.  The 2-year yield increased by nine basis points to 4.97%, as the 10-year yield rose by the same amount to 4.26%.  Oil prices increased by $1.92 or 2.2%, closing at $87.47 a barrel.  Gold prices fell by $23.80 to close at $1943.30 an Oz. Copper prices fell 3.3% to 3.72 a Lb.  The US Dollar continued to be strong despite intervention measures from the Bank of Japan and the People’s Bank of China.  The Dollar/Yen closed at 147.87, the Euro/Dollar closed the week below 1.07, and the Dollar/Yuan closed at 1.3667.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 8/25/2023

-Darren Leavitt, CFA

Financial markets were all over the place last week and ended with mixed results. The S&P 500 gained 0.8% and closed above 4400, a critical psychological level, but fell short of regaining the 50-day moving average of 4459. China’s economic woes continued to make headlines as investors were left unimpressed by the PBOC’s decision to cut their 1-year prime lending rate by just ten basis points to 3.45%. Global PMI data continued to show a contraction in manufacturing while European services fell into a contraction, and US services maintained a slight expansionary reading.

Mixed results from several retailers and stellar results from AI darling NVidia highlighted the tail end of Q2 earnings. Of note, NVidia traded higher for three days leading into earnings, gained nearly 10% after their earnings announcement, and then gave up some of those gains on Friday. This action could signify future weakness in the broader market that has relied on the performance of mega-cap technology issues for most of the year. Finally, the much anticipated Kansas City Fed Symposium at Jackson Hole yielded very little insight from Fed Chairman J Powell. The Chairman’s comments stuck very much to the script he has been going from since the last FOMC meeting. The Fed will continue to be data-dependent; inflation appears to be coming down but still at elevated levels above their 2% mandate, and no indication of future rate cuts.

As I mentioned, the S&P 500 gained 0.8%, the Dow lost .04%, the NASDAQ rose 2.3%, and the Russell 2000 fell 0.3%. US Treasuries also traded in mixed fashion with longer-dated maturities, posting slight gains for the week while the front end of the curve took another beating. The 2-year yield rose by fourteen basis points to 5.05%, while the 10-year yield fell by one basis point to 4.24%. West Texas Intermediate crude fell $0.83 to $79.83 a barrel on a slower global economic narrative. Gold prices increased by $23.20 to close at 1939.90 an Oz. Copper prices increased by $0.06 to $3.76 a Lb.

The labor market continued to show resilience, with Initial Claims falling by 10k to 230k and Continuing Claims falling by 9k to 1.702 million. Durable Goods fell by 5%, well below the estimate of -4%. The Ex-auto reading showed a gain of 0.5% versus the forecast of 0.2%. Weekly Mortgage applications fell by -4.2%, down from last week’s reading of -0.8%. July New Home Sales topped expectations at 714k. US PMI data showed further contraction in manufacturing, with a reading of 47 from the prior reading of 49. Services remained expanding by a smaller margin, reaching 51 from 52.3.  A reading above 50 indicates expansion, while a reading below 50 indicates contraction. The final results for August University of Michigan Consumer Sentiment came in at 69.5 versus the expected 71.5.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 8/18/2023

-Darren Leavitt, CFA

US equity markets fell for the third consecutive week.  The S&P 500 broke its 50-day moving average and then sank below 4400.  The sell-off has been on low volume, and the market may have been due to some consolidation after running hot for most of the spring and early summer.  Fears that China’s economic struggles will spill over to the global economy have weighed on investment sentiment.  Weak economic numbers out of China, including Retail Sales, Industrial Production, and fixed asset investment, and the announcement that Evergrande, a troubled property developer, had declared Chapter 15 bankruptcy, only fostered these concerns. The bond rating firm Fitch also cast a shadow on the health of US financials when it announced it had put multiple banks on notice of possible downgrades.  Also not helping was last month’s Federal Open Market Committee minutes revealed that most of the committee continues to see significant inflation risks.   Fed Funds futures predict a 33% chance of another 25 basis point hike by the November 1st meeting.

The S&P 500 fell 2.1%, the Dow lost 2.2%, the NASDAQ gave up 2.6%, and the Russell 2000 was lower by 3.4%. US Treasuries continued to sell off, with the sell-off more profound in longer-dated tenures. The 2-10 spread compressed to 66 basis points as the yield curve steepened.  The 2-year yield increased by two basis points to 4.91%, while the 10-year yield increased by eight basis points to close at 4.25%.  Notably, the 10-year yield hit the highest level since 2007, when it touched 4.35%.  More supply, coupled with the notion that the Fed may need to keep rates higher for longer, has continued to put upward pressure on yields.  There will be 16 billion in 20-year bonds auctioned this week and given the poor 30-year auction from a couple of weeks ago, investors will be closely watching its results.  Oil prices fell by $2.54 or 3.1% to close at $80.66 a barrel.  Gold prices were lower by $29.90, closing at $1916.70 an Oz.  Copper prices were little changed at 3.70 a Lb. Notably, Bitcoin fell to $26,000, down significantly from the trading range it has been in for the last several weeks.  As you can see, it was a tough week on Wall Street, with most asset classes declining- one exception was the US Dollar which eked out a small gain for the week.

Economic data for the week included a better than expected Retail Sales print.  The headline number was 0.7% versus the street consensus of 0.5%. The Ex-auto reading was also better than expected, coming in at 1%.  US retailers Walmart, Target, and TJ Max posted solid earnings results, although Walmart traded lower after their announcement.  Industrial production came in at 1% versus the 0.1% expectation.  Housing starts and Building permits were roughly in line with expectations.  Initial Claims came in at 239k, while Continuing Claims ticked higher to 1716k.

Investors in the coming week will be listening to plenty of Fed rhetoric from the Kansas City Fed’s annual symposium at Jackson Hole.  A fresh set of Global PMIs will be released and assess the state of manufacturing and services.  The final reading for August University of Michigan’s Consumer Sentiment will also be announced.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

US Financial markets had another week of consolidation.  Equities and US Treasuries sold off in tandem on light volume.  An early week debt downgrade of 10 small to midsized banks and a notice that other downgrades may follow by Moody’s dampened sentiment.  A characterization that China’s economy is a “ticking time bomb” by the Biden administration coincided with weak Chinese economic data and the announcement that another Chinese developer had missed a debt service and was seeking to restructure its debt.  The tail end of Q2 earnings highlighted a decent quarter out of Disney and a weaker-than-expected quarter and outlook from UPS.   Economic data for the week was mixed but showed further signs of moderating inflation.

The S&P 500 fell by 0.3%, the Dow added 0.6%, the NASDAQ gave back 1.9%, and the Russell 2000 shed 1.7%.  The Tech sector was the biggest laggard this week, while Energy and Healthcare outperformed. US Treasuries yields backed up again as issuance was met with mixed results.  The 10-year auction was considered a success, but the 30-year auction on Thursday fell short and helped to push yields higher.  The 2-year yield increased by eleven basis points to close at 4.89%, while the 10-year yield increased by nine basis points to 4.17%.  Oil prices ticked $0.42 higher, with WTI closing at $83.20 a barrel.  Gold prices fell by $30.40 to $1946.60 an Oz.  Copper prices tumbled 4% or $0.15 to $3.71 a Lb.

Economic data showed the Consumer Price index in line with expectations on the headline and core readings at up 0.2% in July.  On a year-over-year basis, overall CPI increased by 3.2%, up from 3% in June, and the Core reading increased by 4.7%, down from 4.8% in June.   Producer Prices came in a little hotter than expected at 0.3% on the headline and core.  Initial Claims ticked up 21k to 248k, more than the 230k expected.  Continuing Claims fell by 8k to 1.684m.  This coming week we will get data on Retail Sales, Industrial Production, Housing data, and Import and export prices.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 8/4/2023

-Darren Leavitt, CFA

Global equity markets fell last week as investors digested a full dose of Q2 earnings reports, a packed economic calendar, more central bank policy decisions, and Fitch’s surprise downgrade of US sovereign debt.

Q2 earnings continued to generally surprise to the upside.  Almost 85% of the S&P 500 companies have reported their results.  For the week, behemoths Apple and Amazon reported.  Amazon reported a great quarter, especially in its cloud services division.  The company gained 8.3% after the report, propelling the consumer discretionary sector higher.   On the other hand, Apple’s report disappointed the street.  Lackluster sales of iPhones and concern about the future growth of hardware pressured the stock. Apple fell 4.8% after their report.  Caterpillar announced a solid quarter, noting that some of its supply chains have normalized.

The economic calendar was equally as busy as the earnings calendar.  On Friday, the Employment Situation report showed an increase of 187k Non-Farm payrolls, less than the expected 200k and well below the figures we have seen in the post-COVID economy.  It’s worth reminding ourselves that this is still a strong report and continues to show a resilient labor market.  Private Payrolls increased by 172k as the Unemployment rate ticked to 3.5% from 3.6%.  Average hourly earnings ticked higher by 0.4%; the street consensus estimate was for a gain of 0.3%.  The Average hourly work week fell by 0.1% to 34.3.  Initial claims for the week came in at 227k while continuing claims increased to 1700k.  ISM Manufacturing continued to show contraction while services declined but remained in expansion mode.  A preliminary look at Q2 productivity showed an impressive increase of 3.7% as Unit Labor Costs increased by 1.6%, less than the consensus estimate of 3%.

The downgrade of the US Sovereign by Fitch was an interesting call and opens the door for further sovereign debt downgrades.  The downgrade from AAA to AA+ was based on “fiscal deterioration,” where large amounts of debt continue to mount while budget governance has become a political stalemate.

The S&P 500 shed 2.3%, the Dow gave back 1.1%, the NASDAQ fell by 2.8%, and the Russell 2000 sold off by 1.2%.   US Treasury action was mixed across the curve and, for the first time in a long time, produced a steepening of the yield curve.  The 2-10 spread declined from over 100 to 72 basis points.  The 2-year yield fell by twelve basis points to 4.78%, while the 10-year yield increased by nine basis points.  Fitch’s downgrade, coupled with better the expected economic data, helped push the curve’s longer end higher.  Oil prices increased by $2.24 to close at $82.78.  Gold prices advanced by $16.70 to $1977 an Oz.  Copper prices fell by $0.04 to 3.86 a lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 7/28/2023

As expected, the Federal Reserve raised its policy rate by twenty-five basis points to 5.25%-5.50%. Fed Chairman Jerome Powell continued to push back on the notion that the Fed was finished with the rate hikes. Instead, he suggested the Fed will remain data-dependent and craft policy to achieve its price stability and full employment mandates. The Fed Funds futures now price in a 29.7% probability of a 25 basis point by November.  The European Central Bank also increased several of its policy rates by a quarter point but came across as more dovish than expected, with some speculating the ECB could be done with its hiking cycle. The Bank of Japan kept its policy rate the same but surprised markets by announcing it would loosen its yield curve control. The news had been rumored early in the week and perhaps was one catalyst for the sell-off on Thursday. However, the Yen was little changed against the US Dollar for the week, and markets seemed to shrug off the announcement on Friday. Investors will hear from the Bank of England this week, where the BOE is expected to announce a fifty basis point hike.

Q2 earnings continued to flood in, and the margin continued to impress. Meta and Google were highlighted this week with better-than-expected results and strong guidance, which propelled their stocks higher. Boeing, J&J, and P&G also had solid results. Microsoft was a bit of a disappointment but beat expectations, just not by enough, given the recent run-up in the name. The coming week will be the busiest so far this earnings season.

The economic calendar was packed. PCE, the preferred measure of inflation, showed that headline and core prices in the data set have moderated on a year-over-year basis. The headline number came in up 0.2%, in line with expectations, while it fell to 3% year-over-year from May’s level of 3.8%. Similarly, the Core number was up by 0.2% in June, in line with estimates, and fell to 4.1% from Mays’s figure of 4.6%. Advanced estimate of Q2 GDP impressed with a growth rate of 2.4% versus expectations of 1.8%. The GDP Deflator came in at 2.2%, less than the 3.1% estimate. Personal Income came in at 0.3%, below the estimated 0.4%, while Personal Spending came in better than expected at 0.5% vs. 0.3%. Consumer Confidence was much better than anticipated at 117, and the Final Reading of Consumer Sentiment from the University of Michigan showed significant improvement from June, coming in at 71.6 from 64.4. Initial claims came in at 221k, and Continuing Claims fell to 1690K.

The S&P 500 gained 1%, the Dow added 0.7%, the NASDAQ jumped 2%, and the Russell 2000 increased by 1.1%. US Treasury yields increased across the curve. The 2-year yield increased by five basis points to 4.9%, while the 10-year yield rose by thirteen basis points to 3.97%. West Texas Intermediate crude price rose by 4.5% or $3.49 to close at $80.54 a barrel. Gold prices fell by $6.20 to $1960.30 an Oz.  Copper prices increased by $0.10 to 3.92 a Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 7/21/2023

-Darren Leavitt, CFA

US financial markets were mixed last week as investors continued to dissect 2nd quarter earnings results and economic data. The notion of a soft landing in the economy resonated with investors even as global central banks are poised to increase their respective monetary policy rates in the coming week.

The Fed will announce its decision on Wednesday, July 26th, where it is widely expected that they will raise by 25 basis points and come out with moderating hawkish tone. The European Central Bank will also likely increase its policy rate by 25 basis points. Still, it will likely continue to be much more hawkish on its future path of monetary policy. The Bank of Japan is expected to keep an accommodative policy but may infer changes to their yield curve control measures to stave off a further weakening of the Yen. The Bank of England meets on August 3rd, where it is expected to raise rates to thwart inflation that is well above levels seen in the US and other parts of the EU. The divergence in policy is something we have talked about often, and this divergence is likely to become more meaningful over the next few quarters.

2nd quarter earnings announced over the week produced quite a bit of price action. Mega Cap issues such as Tesla and Netflix beat earnings expectations but sold off on cautious rhetoric from their leaders. There is also a concern that these “Magnificent Seven” names have traded to overbought levels and are due for a pullback. Taiwan Semiconductors’ quarter was solid, but the company warned of waning demand for their products while at the same time slowing the build of their Fab in north Phoenix due to a lack of supply of skilled labor. Financials were a bright spot last week as Bank of America, Schwab, Morgan Stanley, and several regional banks showed better-than-expected results. In the coming week, we will get earnings from stalwarts Google and Meta.

Economic data for the week showed a labor market that continues to be resilient. Initial claims came in at 228k, well below recessionary levels, while continuing claims ticked up slightly to 1754k. Retail sales came in lighter than expected, with the headline and ex-auto figures increasing by 0.2% versus 0.6% and 0.4%, respectively. Housing starts and building permits also came in less than expected. This week we will get data on the Fed’s preferred measure of inflation, the PCE. Final Q2 GDP figures will also be reported along with Personal Income and Spending.

The S&P 500 added 0.7%, the Dow rose 2.10% and inked its 10th straight of gains, the NASDAQ fell 0.6%, and the Russell 2000 increased by 1.5%. US Treasuries sold off after last week’s monster rally. The 2-year yield increased by thirteen basis points to 4.85%, while the 10-year yield jumped by seven basis points to close at 3.85%.  Oil prices advanced 2.1% or $1.65, with WTI closing at $77.05 a barrel. Gold prices were little changed, closing at 1966.10 an Oz.  Copper prices fell by $0.11 to $3.82 a Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 7/14/2023

-Darren Leavitt, CFA

US markets rallied on the notion that the economy may be able to execute a soft landing as inflation wanes and employment continues to hold up.  Inflation data reported during the week showed moderating prices at the consumer and wholesale levels.  Q2 earnings season kicked off with better-than-expected earnings from financials: JP Morgan, Citibank, and Wells Fargo.  United Healthcare, Delta Airlines, and Pepsi also beat their earnings expectations.  China announced new stimulus efforts, while Sweden got the nod to become a NATO member.

A broad-based rally saw the S&P 500 gain 2.4% on the week.  The Dow added 2.3%, the NASDAQ advanced 3.3%, and the Russell 2000 jumped 3.6%.  US Treasuries rallied on the weaker inflation data, with the 2-year yield coming down twenty-one basis points to 4.73%.  The 10-year yield fell by twenty-three basis points to close at 3.82%.  A perceived divergence in the path of central bank policies hit the US dollar index, which fell by 2.4% over the week.  Fed rhetoric during the week was skewed to more tightening, and while Fed Fund Futures project a near certainly of a July 25 basis point hike, the projections of another hike fell on this week’s pricing data.

Oil prices increased by 2% or $1.55, with WTI closing at $75.40 a barrel.  Gold prices jumped by 1.5% or $30.7 to 1964.40 an Oz.  Copper prices increased by 4% to close at 3.93 a Lb.

The Consumer Price Index highlighted economic data for the week.  The headline CPI and Core CPI for June came in at 0.1% less than the expected 0.2%.  On a year-over-year basis, CPI came in at 3%, down from 4% in May.  The Core year-over-year reading decreased to 4.8% from 5.3% in May.  Wholesale prices tracked by the Producer Price Index also saw prices moderating. Headline PPI came in at 0.1% versus the expected 0.2% and was up just 0.1% on a year-over-year basis, down from May’s increase of 1%.  Core PPI increased by 0.1% in June and fell to 2.4% from 2.6% in May year-over-year. Export prices fell by 0.9%.  Initial Unemployment Claims came in below estimates at 237k, while Continuing Claims came in at 1729k, up slightly from the prior week’s reading of 1718k.  The University of Michigan’s preliminary read on the July Consumer Sentiment came in better-than-expected at 72.6 versus the consensus expectation of 66.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 7/7/2023

-Darren Leavitt, CFA

The holiday-shortened week was discombobulated, to say the least. Trading desks on Wall Street were lightly staffed despite a full economic data calendar.   The start of the third quarter ushered in equity and US Treasury losses. The first half of the year saw decent gains, and there is a feeling that the market has run up too much, and a pullback is warranted. The United States and China relations started the week with more restrictions on trade. Specifically, China said it would limit the export of certain rare earth metals, including Gallium and Germanium. The US announced that it would restrict China’s access to Cloud computing. The news came before Treasury Secretary Janet Yellen’s visit to China. The visit appears to have produced constructive dialogue that may promote a better market open on Monday.

The S&P 500 lost 1.3%, the Dow led declines with a loss of 2%, the NASDAQ fell 1.2%, and the Russell 2000 gave back 1.3%. US Treasuries struggled as the likelihood of a July rate hike surged to almost a certainty, while the prospect of another in September and November also increased. The 2-year yield traded above 5% on Thursday before falling back to 4.94% on Friday but rose six basis points for the week. The 10-yield eclipsed 4%, increasing twenty-three basis points on the week to close at 4.05%.

Oil prices surged 4.5% to close at $73.85 a barrel. Gold prices increased by $4.80 to 1933.70 an Oz.  Copper prices traded higher by $0.02 to close at $3.78 a Lb. The US Dollar weakened over the week, and Bitcoin traded flat to close at $30,223.

Economic data highlighted an impressive US labor market. ADP figures showed that payrolls had increased by 497k versus the street consensus of 245K. This strong report was accompanied by an ISM Services print that showed the services sector of the economy expanding more than anticipated. ISM Services increased by 53.9 vs. an expected 51.1. However, Manufacturing continued to contract further, coming in at 46, down from the prior reading of 46.9. Of note, China and Eurozone ISM Services figures missed to the downside. The Employment Situation Report released on Friday painted a little bit different picture. Payrolls were less robust than expected, while average hours worked increased. Non-Farm Payrolls increased by 209K versus the consensus estimate of 220K, while private Payrolls increased by 149k vs. 210k. The Unemployment rate ticked lower to 3.6% from 3.7%, and average hourly earnings increased by 0.4%, slightly ahead of the 0.3% expected. Average hourly earnings were up 4.4% on a year-over-year basis.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 6/30/2023

-Darren Leavitt, CFA

Markets ended the month of June in strong form. Better-than-expected economic data for the week showed a resilient economy and inflation moderating. Investors were dismissive of hawkish commentary from ECB President Lagarde and Fed Chairman Jerome Powell at the European Central Bank’s summit in Portugal. Fed Chairman Powell indicated that more than two rate hikes might be necessary to curtail inflation. The markets also dismissed what appeared to be a coup d ‘etat in Russia. The Bank of Japan and the People’s Bank of China intervened in the currency markets as their currency weakened. A hotter-than-expected CPI print in Japan made some think the BOJ may move away from its easy monetary policy while China continued to announce more stimulus measures.

The S&P 500 gained 2.3% for the week, was up 6.34% in June, and ended the 2nd quarter up 15.9%. The Dow added 2% for the week, 4.4% for June, and is up 3.8% year to date. The NASDAQ increased by 2.2%, is up 6.46% for June, and has rallied 31.7% this year. The Russell 2000 inked a 3.7% advance, is up 6.76% in June, and has increased 7.2% this year. As the numbers indicate, the broader market in June participated alongside Mega-Caps.  Apple eclipsed a 3 trillion dollar market capitalization on an upgrade from Citibank.

The US Treasury market struggled again this week, and June was a challenging month for bond investors. The 2-year yield increased by thirteen basis points for the week and was up forty-nine basis points in June to close at 4.88%. The 2-year yield has risen by eighty-two basis points this year. The 10-year yield increased eight basis points last week, is up eighteen in June, and up thirty-three this year. Bond prices fall as yields rise. The US Aggregate Bond Index is up 1% year to date.

Oil prices increased by 2.1% or $1.47, with WTI closing at $70.65 a barrel. The energy sector was one of the best-performing sectors this week but has been one of the worst this year. Gold prices were little changed, closing at $1928.90 an Oz. Gold tested the $1900 price level but was able to find support at that level. Copper prices fell by $0.04 to $3.76 Lb.

Economic data showed the third estimate of Q1 GDP revised to 2% from 1.3%. The PCE, the Fed’s preferred measure of inflation, increased by 0.1% on the headline number, which was slightly higher than the street consensus of a flat reading. Core PCE increased by 0.3%, in line with expectations. On a year-over-year basis, PCE increased by 3.8% in May, down from 4.3% in April, while Core CPI increased by 4.6% in May, down from 4.7% in April. Personal Income increased by 0.4% as Personal spending rose by 0.1%. New Home Sales continued to show strength in the housing market, rising by 763k units versus the estimated 680k. Consumer Confidence came in better than expected at 109.7 vs. 104. Initial claims ticked down to 239k, which was lower than the anticipated 268k. Continuing claims fell to 1742k from 1761k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

-Darren Leavitt, CFA

US equity markets tapped on the brakes with modest losses across the board.  The notion that higher rates will further dampen global economic growth gave investors reason to take some profits.  Economic data painted a resilient economy but continued to show signs of slowing.

Global Central Banks’ rhetoric continued targeting elevated inflation and a vow to increase policy rates to lower prices.  Federal Reserve Jerome Powell was in front of the Congressional Financial Services Committee and the Senate Banking Committee for his semi-annual testimony, reiterating that two more rate hikes are likely despite the pause in June.  The Bank of England raised its policy rate by 50 basis points on the back of a hot UK CPI print.  The Norges Bank increased its policy rate by 50 basis points, while the Swiss National Bank upped its rate by 25 bps.

Of note, China’s central bank has been adding more stimulus to its economy by lowering key lending rates, but despite its efforts, investors appear to think more is needed. Chinese markets fell over the week. Indian Prime Minister Modi met with President Biden and Congress to strengthen relations between the two countries.  The Prime Minister also met with corporate executives from Amazon, GE, and Tesla to foster new investment within the Indian economy.

The S&P 500 lost 1.4%, the Dow fell 1.7%, the NASDAQ gave up 1.4%, and the Russell 2000 lagged, losing 2.9%.  US Treasuries lost on the front end of the curve, while longer-tenured issues had slight gains.  The 2-year yield increased by four basis points to 4.75%, as the 10-year yield fell by three basis points to 3.74%.  Despite a draw in weekly crude inventories, WTI prices continued to struggle.  Oil prices fell 3.8% or $2.74 to $69.18 a barrel. Gold prices fell by $40.40 to $1930.90 an Oz, while Copper prices regressed by $0.09 to close at $3.80 an Lb.

Economic data showed improvement in the housing sector.  MDA mortgage applications increased for the second week in a row, while Housing Starts and Permits surprised meaningfully to the upside.  Existing home sales fell by 20.4% year over year but came in better than expected at 4.30 million, highlighting the low supply of homes for sale. Initial Jobless claims continued to exceed 260k, coming in at 264K.  Continuing Claims fell from the prior week to 1.759 million.  Leading Economic indicators fell for the 14th consecutive time, coming in at -0.7 versus the previous reading of -0.8%.  Preliminary June IHS global PMIs showed manufacturing in contraction in the US, Eurozone, and Japan.  Services continue to show expansion but continue to moderate.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 6/16/2023

-Darren Leavitt, CFA

US equity markets continued to impress with another set of weekly gains. The mega-cap issues retook the lead, while small-cap issues lagged. Global central bank policy was top of mind for investors who received a full dose of economic data. The US Federal Reserve unanimously decided to hold its monetary policy rate at 5%-5.25% but indicated in its Summary of Economic Projections that the terminal rate is expected to top out at 5.6%. Chairman J. Powell was also relatively hawkish in his post-announcement Q&A, saying July is a live meeting. The European Central Bank raised its policy rate by 25 basis points, indicating that more rate hikes were probable. The Bank of Japan left its policy rate unchanged at -0.1%, while the Bank of England also decided to keep its rate intact. The Peoples Bank of China (PBOC) lowered its 1-year medium-term rate by ten basis points as China continues to stimulate its economy.

Economic data in the US showed continued moderation in prices. The Consumer Price Index came in line with expectations of an increase of 0.1%, while the core reading that excludes food and energy also came at 0.4%. On a year-over-year basis, the headline number came in at 4%, down from 4.9% in April. The core reading fell to 5% from 5.5% in April. Similarly, Producer Prices also fell in May. Headline PPI fell by 0.3% more than the consensus estimate of 0%. The Core reading increased by 0.2%, slightly above the expected increase of 01%. Both figures fell on a year-over-year basis from the prior month’s reading. While Core CPI on a year-over-year basis remains elevated, the street cheered the fact that prices continue to move in the right direction. The shelter component of the CPI continues to be elevated at 8% and makes up 60% of the CPI’s advance. Retail Sales increased by 0.3% in May, slightly more than the consensus estimate of 0.2%. Ex-Auto’s retail sales increased by 0.1% less than the 0.3% expected. Initial Claims came in north of 260K for the third week in a row, while Continuing Claims increased to 1775k from 1755k in the prior week.

The S&P 500 inked a gain of 2.6% on the week and traded north of 4400. Goldman Sachs increased its year-end price target on the S&P 500 from 4000 to 4500. The Dow rose by 1.2%; the NASDAQ outperformed with a 3.2% gain from strong Information Technology Mega Caps and a strong showing from Semiconductors. The Russell 2000 lagged but added 0.5%.

US Treasuries continued to sell off, with yields moving higher across the curve. The 2-year yield increased by nine basis points to 4.71%, while the 10-year yield increased by two basis points to 3.77%. Oil prices rose by $1.62 to $71.92, but the energy sector lost ground on the week despite the move. Gold prices fell by $5.8 to close at $1971.30 an oz. Copper prices rebounded with a $0.11 gain to close at $3.89 an Lb. This week, the US Dollar index lost ground on significant weakness to the Euro and British Pound.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 6/9/2023

-Darren Leavitt, CFA

The S&P 500 entered a new bull market, increasing 20% off the October lows. The move came with broader participation outside the mega-cap technology issues, responsible for most of the market’s performance this year. Cyclical sectors such as the financials, consumer discretionary, and industrials posted solid gains for the week. Global Central Banks surprised investors with the Bank of Australia and Bank of Canada raising their respective policy rates by 25 basis points. The US Federal Reserve is expected to pause its rate hikes at the June meeting, which concludes on Wednesday, while the European Central Bank is widely expected to raise its rate by 25 basis points. Markets will likely be standoffish in front of the Fed’s FOMC and then react to Chairman J Powell’s assessment of the economy in his post-meeting Q&A.  Divergence in the opinions of Fed officials is likely and will foster uncertainly for the future path of Fed monetary policy. Currently, Fed Fund Futures’ price in a 29% probability of a 25 basis point hike at the June meeting and a 70% chance of a 25 basis point hike in July.

The week also saw former President Donald Trump charged with 38 criminal counts, including obstruction and the mishandling of classified documents, and the SEC announced that it is investigating cryptocurrency companies Binance and Coinbase.  Tesla had a great week with the announcement that the company would collaborate with GM on charging technology.

The Economic calendar was limited to a handful of data sets. Initial claims increased by 28k to 261k, the highest level since last November. Interestingly, Continued Claims fell by 37k to 1.757 million showing again a very resilient labor market. ISM Non-Manufacturing showed that the services side of the economy is still expanding but at a slower pace. The ISM figure came in at 50.3, down from the prior reading of 51.9. This week, we will get May Consumer Price Index data and Retail Sales figures.

The S&P 500 gained 0.4%, the Dow increased by 0.3%, the NASDAQ added 0.1%, and the Russell 2000 advanced by 1.9%. US Treasuries sold off across the curve. The 2-year yield increased by eleven basis points to 4.62%, while the 10-year yield added six basis points to 3.75%. The US Treasury will auction off 40 billion in 3 years on Monday. Oil prices decreased by 1.8% or $1.35 to $70.30. Goldman Sachs lowered their price target for the third time this year based on increased supply and softening global demand. Gold prices increased by $7.30 to $1977.10 an OZ, as Copper prices increased by $0.06 to $3.78 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 6/2/2023

-Darren Leavitt, CFA

Investors enjoyed an excellent week of gains in US equity markets. Washington finally got a debt ceiling deal through Congress and onto President Biden’s desk. On the margin, it appears that the Republicans came away with a small victory, but in reality, the deal kicks the can down the road, and we will likely find ourselves in the same position two years from now. The agreement did avoid a US default and helped to prompt this week’s broad-based rally.

Rhetoric out of Global Central Banks tilted toward a more dovish tone. In Europe, ECB officials acknowledged that more hikes are coming but suggested that they are near their terminal rate. Here, in the US, Fed Presidents offered conflicting points of view on whether a pause is needed at the June meeting. Cleveland Fed President Mester contends that there is insufficient evidence in the economic data to warrant a pause at the June meeting. Presidents Harker and Jefferson argue that the Fed should pause in June until they have seen more data. The conflicting opinions are likely to become more prevalent in coming meetings. Coming into the week, the CME Fed Funds Futures tool assigned nearly a 70% probability of a 25-basis point hike in June. The possibility plunged to less than 25% after Harker’s and Jefferson’s comments alongside a weaker ISM Manufacturing print.

The S&P climbed 3.23% as it broke above technical resistance at 4200. The Dow added 3.05%, the NASDAQ led again with a gain of 4.27%, and the Russell 2000 advanced 3.27%.

The US Treasury market had another turbulent week. US Treasury prices increased across the curve but pulled back significantly after a robust Employment Situation Report. The 2-year decreased by five basis points to 4.51%, while the 10-year yield fell by eleven basis points to 3.69%.

The commodity complex ended the week with mixed results. Oil prices fell by 1.2% to $71.65 a barrel despite rumors that OPEC+ is poised to announce another production cut this weekend. Gold prices advanced by $26.40 or 1.3% to $1969.8, while Copper prices increased by $.05 to $3.72 an Lb. The Dollar index traded slightly lower this week.

The May Employment Situation report highlighted economic data for the week. The report showed a resilient labor market as Non-Farm Payrolls increased by 339k versus the street’s expectation of 210k. Similarly, 283k Private Payrolls were created in May, above the 200k estimate. The Unemployment rate rose to 3.7% from 3.4% as Average Hourly earnings increased as expected at 0.3% month-over-month. JOLTS data showed increased job openings from the prior month and stood at 10.103 million in May. ADP figures payroll figures also came in well above estimates at 278k. ISM Manufacturing showed that part of the economy continues to be in contraction. The report came in at 46.9 versus the forecast of 46.8. However, the information showed signs of improvement in the Prices Paid component, which supports the view that inflation continues to moderate.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 5/26/2023

-Darren Leavitt, CFA

As investors awaited news from the debt ceiling negotiations, markets continued to ebb and flow.  The S&P 500 continued to trade range-bound, oscillating between 4100 and 4200.  Fed rhetoric continued to open the door for another set of interest rate hikes and hammered the front end of the yield curve.   Economic data reported during the week seemed to substantiate the need for more rate hikes as Fed Fund Futures saw the probability of a June rate hike move to 64.2% from nearly zero three weeks ago.   A blowout quarter and an optimistic outlook from semiconductor chip designer NVidia highlighted the last stint of first-quarter earnings.  The stellar report prompted another rally in mega-cap technology issues that have accounted for most of this year’s market returns.

The S&P 500 gained 0.3%, the Dow lost 1%, the NASDAQ increased by 2.5%, and the Russell 2000 traded unchanged. US Treasuries endured another steep selloff as yields across the curve rose—bond price fall when their yields increase.  The 2-year yield increased by twenty-nine basis points to 4.56% while the 10-year yield rose by eleven to 3.8%.

Oil prices increased by 1.1% or $0.79 to close at $72.55 a barrel.  Gold prices fell 1.9% or $38.40 to $1943.4. Copper prices continued to struggle, closing down $0.06 to $3.67 an Lb.

The dollar strengthened against the Yen, Euro, British Pound, and Yuan.  China voiced concern over the recent appreciation of the US Dollar relative to its currency.

US economic data reported for the week showed a resilient economy.  First quarter GDP figures came in strong than expected at 1.3% growth versus the expectation of 1.1%.  German GDP contracted for the second quarter in a row, putting the country into a technical recession defined as two consecutive quarters of negative growth.  The US labor market only showed 229k initial jobless claims; the street was looking for 250k.  Continuing Claims also fell to 1794k from 1799k in the prior week.  Personal Spending increased to 0.8% in April, higher than the anticipated 0.4%, highlighting the strength of the consumer. Personal income increased to 0.4%. The Fed’s preferred measure of inflation, PCE, came in hotter than expected.  The headline number came in at 0.4% versus the estimated 0.3% month-over-month and was up 4.4% year-over-year from March’s 4.2%.  The Core reading was also up 0.4% over March and increased 4.7% annually. New Home Sales increased to 683K, better than the expected 670.  Consumer Sentiment also ticked a bit higher in May, with the University of Michigan’s data showing a reading of 59.2, up from the last preliminary reading of 58.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 5/19/2023

-Darren Leavitt, CFA

Investors were treated to a week of gains for US indices, while US Treasuries fell significantly across the curve. Early in the week, there was cautious optimism around debt ceiling negotiations as both sides agreed to the need for bipartisan talks. Mega-cap technology continued to lead the market, with Google, Nvidia, Microsoft, and Meta all making new 52-week highs. Newmont’s 19-billion-dollar takeover announcement of Newcrest and Oneok’s 18.8-billion-dollar acquisition of Magellan Midstream fostered positive sentiment. Similarly, the statement that the UK had approved Microsoft’s takeover of Activision aided the tone.

On the other hand, Fed rhetoric pushed back on the notion that the Fed was done with its rate hiking cycle. Dallas Fed President Logan suggested that recent data did not support a pause in June. Chairman Powell echoed his post-FOMC meeting remarks on Friday at a speech in Washington that reiterated the Fed’s mandate of 2% inflation and left the door open to more rate hikes. Investors also had to contend with the announcement on Friday that debt ceiling negotiations had ended without a resolution and the recognition that both sides were still nowhere near an agreement. President Biden amended his plans for the G7 meetings to return to Washington on Sunday, hoping to restart the negotiations on Monday.

The S&P 500 gained 1.6%, the Dow added 0.4%, the NASDAQ climbed 3%, and the Russell 2000 jumped 1.9%. It was an ugly week for Treasuries as investors contemplated if the Federal Reserve was finished with hiking rates and a debt ceiling compromise could be forged. The 2-year yield increased by twenty-nine basis points to 4.27%, and the 10-year yield rose by twenty-three basis points to 3.69%. Interest-sensitive sectors- Utilities and Real Estate sold off with Treasuries.    Oil prices gained 2.2% or $1.60 to close at $71.76. Gold prices fell by $36.90 to $1981.80 an Oz.  Copper prices closed unchanged for the week at $3.73 a Lb. The US Dollar traded slightly higher on the week.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 5/12/2023

-Darren Leavitt, CFA

US equity and fixed-income markets continued to trade in a tight range. 4100 proved to be support for the S&P 500, while the US 10-year note yield oscillated around 3.46%. Cyclical issues were under pressure as investors assessed the likelihood of a slower global economy. This week, the Communication Services sector led gains on the back of Google’s 11% advance after a successful developer conference highlighted several new AI initiatives.

Tightening lending standards after several regional bank failures manifested themselves in the Senior Loan Officers Opinion Survey. The survey protracted tightening standards across all loan categories throughout the rest of 2023. Regional banks continued to drag the financial sector as PacWest shares fell 21% after their announcement that their deposits had decreased by 9.5%.

President Biden met with Congressional leaders at the White House to negotiate to raise the debt ceiling. However, no compromise was made, and negotiations were pushed into the coming week. The Congressional Budget Office announced that the government could stay funded through the end of July with the Treasury’s extraordinary measures coupled with recent tax receipts.

Economic data showed inflation continued to moderate in April. The Consumer price index increased month-over-month by 0.4%, in line with expectations. Year-over-Year CPI was up 4.9% in April, down from 5% in March. The shelter index was the most significant contributor to April’s increase, rising 0.4%. Core CPI which excludes food and energy, rose by 0.4%, slightly above the consensus forecast of 0.3%. Year-over-year, the Core reading came in at 5.5%, down from 5.6% in March. Producer prices also showed inflation coming down. The headline and core number of PPI came in at 0.2% in April, less than the consensus estimates of 0.3%. Year-over-year figures for both measures also showed a modest decline to 2.3% and 3.2%, respectively. Initial jobless claims saw an uptick to 264k while Continuing Claims rose to 1.813 million. Preliminary University of Michigan Consumer sentiment fell to 57.7 from April’s final reading of 63.5 and saw 5-year inflation expectations tick up to 3.2% from 3%, the highest reading since 2011.

The S&P 500 lost 0.3%, the Dow gave back 1.1%, the NASDAQ increased by 0.4%, and the Russell 2000 shed 1.1%. US Treasuries sold off across the curve. The 2-year note yield increased by seven basis points to 3.98%, while the 10-year yield increased by one basis point to 3.46%. Oil prices struggled, losing $1.36 or 1.9% to close at $70.06 a barrel. Gold prices were little changed, falling $5.90 to 2018.70 an Oz. Copper prices fell by $0.16 or 4% to $3.73 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 5/5/2023

-Darren Leavitt, CFA

Investors were treated with an extremely busy start to May. Central bank decisions on monetary policies and more first-quarter earnings were front and center, while there was a full slate of economic data to digest. Regional bank woes continued despite JP Morgan’s takeover of troubled First Republic Bank.

The Federal Reserve raised its policy rate by 25 basis points to 5%-5.25%. Fed Chairman Powell did suggest that the Fed would likely pause in raising rates further but, at the same time, backed away from the notion that they would be cutting rates anytime soon. However, the market is currently pricing in the possibility of a rate cut in their November meeting. Yields fell meaningfully on the front end of the curve, while longer-duration Treasury yields remained flat to higher. The European Central Bank also raised its policy rate by 25 basis points but indicated it still had more work to do concerning its policy rate to bring in inflation. The Hong Kong Monetary Authority raised its rate by 25 basis points, as did Norway’s Norges Bank. Fears that the global economy will contract and lead to recession due to tighter financial conditions hit the cyclical sectors and the price of oil. Exxon Mobil was downgraded by Goldman Sachs to neutral from a buy and further dampened sentiment on the energy complex.

First-quarter earnings continued to come in with better-than-expected results on the margin. Nearly two-thirds of the S&P 500 companies have reported and generally have produced better results on the top and bottom lines. Apple posted a great quarter, as did Starbucks, Amerisource Bergen, Pfizer, and Zillow- to name a few.

The April Employment Situation Report highlighted the economic calendar. Non-Farm Payrolls surprised to the upside, with 253k payrolls created versus the consensus estimate of 180k. Private Payrolls also beat expectations with a gain of 230k. The Unemployment rate fell to 3.4% from 3.5%; the street was looking for an uptick to 3.6%. Average Hourly Earnings were higher than expected, coming in at 0.5% on a month-over-month basis relative to the consensus estimate of 0.3%. The ADP payroll number was consistent with the report, coming in at 296k versus 142k. Initial claims for the week came in at 242k, and Continuing Claims ticked down to 1.805 million from 1.843 million. JOLTS data continued to show many jobs available in the US economy. The robust labor statistics fostered the idea that a soft landing may be in play and helped to push the US equity market higher on Friday.

For the week, the S&P 500 lost 0.8%, the Dow gave back 1.2%, the NASDAQ gained 0.1%, and the Russell 2000 shed 0.5%. The 2-year note yield fell by fifteen basis points to 3.91%, while the 10-year yield closed unchanged for the week at 3.45%. Oil prices fell nearly 7% or $5.34 to $71.42 a barrel. Gold prices increased by $25.90 to $2024.60 an Oz.  Copper prices were unchanged for the week, closing at $3.89 a Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 4/28/2023

-Darren Leavitt, CFA

Markets ended the month of April with slight gains for the large-cap indices and small losses for the small-caps. Q1 earnings continued to be in focus as some of the most influential companies posted mixed results. The week also had a busy economic calendar that showed a slower-than-expected preliminary Q1 GDP reading and persistent inflation.

According to Factset, 53% of S&P 500 companies have reported first-quarter earnings results. The results have been better than expected. On the Earnings per Share front, 79% of the companies that have posted earnings have been better than the estimates. That is better than the 5-year and 10-year averages. The results that have beaten have been better by 6.9% on average, less than the 5-year average and slightly above the 10-year average. 74% of the companies have reported better-than-expected revenues by an average of 2.17%. The results beat the 5-year and 10-year averages for both frequency and magnitude. The street still expects full-year 2023 earnings to grow by 1.2%. Second-quarter earnings are expected to decline year-over-year by 5%, the third quarter is expected to grow by 1.7%, and the fourth quarter is expected to increase by 8.8%. The forward Price Earnings ratio is 18.1x, the same as at the end of March. Google, Amazon, and UPS results were disappointing, while investors cheered results from Exxon Mobile, Meta, and Microsoft results.

The preliminary read of the first quarter GDP came in at 1.1%; the street was looking for 2.3% growth. The GDP price deflator was slightly hotter than expected at 4%; the consensus estimate was 3.8%. The first quarter’s Employment Cost Index rose 1.2% more than the expected 1.1%. 70% of ECI is made up of wages, which increased by 1.2%. Initial Jobless Claims came in at 230k, while Continuing Claims fell slightly to 1865k. The Federal Reserve’s preferred measure of inflation, the PCE, came in line with estimates on both the headline and core readings. PCE grew by 0.1% month-over-month and fell to 4.7% from 5.1% year-over-year. Core PCE, which excludes food and energy, came in at 0.3% month over month and fell to 4.6% from 4.7% on a year-over-year basis. The final April reading of the University of Michigan’s Consumer sentiment came in line with estimates at 63.5, while Consumer Confidence results were less than expected at 101.3. Finally, Personal income rose more than expected at 0.3% as Personal Spending came in flat.

The S&P 500 gained 0.87% for the week and closed April with a 1.46% advance. The S&P 500 is up 8.59% for the year. The Dow gained 0.86% for the week, was up 2.48% for April, and is up 2.87% year to date. The NASDAQ rose 1.28% over the week, was up 0.04% for April, and holds a 16.82% advance in 2023. The Russell 2000 fell 1.11% on the week, lost 1.86% in April, and is up 0.44% for the year.

US Treasuries produced gains in the last week of April and held on to their April advance. The 2-year note yield fell by ten basis points for the week to close at 4.06%, while the 10-year bond yield fell by twelve basis points to 3.45%. The Federal Reserve will meet for its May meeting this Tuesday and Wednesday, where it is widely expected to raise the Fed Funds rate by another twenty-five basis points.

Oil prices fell 1.4% on the week but gained 1.8% for the month, with WTI closing at $76.76 a barrel. Gold prices advanced by $7.9 to close at $1998.70 an Oz.  Copper prices continued to fall, losing $0.09 to $3.89 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 4/21/2023

-Darren Leavitt, CFA

US equities traded sideways throughout the week as investors contemplated Q1 earnings reports, more Fed rhetoric, and weakening economic data. International markets were also off for the week, with Chinese stocks taking a hit on concerns that more trade restrictions are forthcoming.

Earnings announcements during the week came in with mixed results. Tesla’s stock took a beating after they announced weaker-than-expected margins and the inclination to allow margins to compress further for higher deliveries. Regional banks sold off in the wake of Zion’s bad quarter and on continued attrition of bank deposits. Johnson and Johnson sold off, as did Freeport McMorran. Lockheed Martin was rewarded after a positive quarter, and Taiwan Semiconductor advanced even as they tempered forward guidance. This coming week the earnings calendar will be packed with Microsoft, Google, Amazon, and Meta, all slated to report.

This week, there was a full dose of Fed rhetoric reiterating that the Fed is likely to raise another 25 basis points at the May meeting (currently an over 80% probability being priced into the Fed funds futures) and that rates should remain higher for longer. Cleveland Fed President Mester thinks the Policy rate needs to be north of 5%, while Philadelphia Fed President Harker expressed concerns about how high inflation remains. Atlanta Fed President Bostic endorsed another rate hike in May, and St. Louis Fed President Bullard echoed concerns on the persistence of inflation.

Economic data for the week showed a weakening economy. Initial Jobless Claims increased by 5k to 245k, while Continuing Claims hit the highest reading since November of 2021 at 1.865M. Existing Home Sales fell 2.4% as weekly Mortgage applications decreased by 8.9%. The Philly Fed index saw its 8th straight decline and fell to a level not seen since May 2020 at -31.1%.   Global Manufacturing was generally weaker and still in contraction, while Services data showed expansion but at a declining rate.   US Leading Economic Indicators fell 1.2%; the street consensus was -0.4%.

The S&P 500 lost 0.1%, the Dow fell 0.23%, the NASDAQ gave back 0.47%, and the Russell 2000 retreated 0.63%. US Treasuries price fell again this week, with the 2-year yield increasing by six basis points to 4.16% and the 10-year yield increasing by five basis points to 3.57%. Bond prices fall when yields increase. Oil prices fell 5.6%, giving back much of what was made off the OPEC + production cuts. Oil and copper fell on the notion that economic growth would slow. Copper prices fell 3.16% or 0.13 cents to $3.98 an Lb.  Gold prices fell by $26.10 to $1991.10 an Oz.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 4/14/2023

-Darren Leavitt, CFA

Trade was quiet this week as investors awaited inflation data and the start of first-quarter corporate earnings.  Inflation data was mixed but showed another month of moderating prices.  The reported inflation data did raise expectations that the Federal Reserve would raise its policy rate by another twenty-five basis points in their May meeting from just over 70% to 79%.  At the end of the week, Fed rhetoric echoed the Fed’s minutes from the March meeting with President Waller, suggesting the Fed’s work has hardly moved the inflation needle and that more rate hikes are needed, and that rates should remain elevated for longer than most expect.

Interestingly, three rate cuts are priced into the market before year-end.   The FOMC minutes suggested that many Fed officials expect a mild recession by the end of the year and that the most recent regional bank failures will most likely tighten financial conditions further.  Q1 earnings kicked off with the financials. JP Morgan, Citi Bank, Wells Fargo, Blackrock, and PNC showed better-than-expected results and helped propel the financial sector to a nice gain for the week.  Conversely, United Health Care disappointed investors due to uncertainties surrounding earnings forecasts because of changes to the Medicare Advantage program.  Influential Boeing also tempered markets on the announcement that 737 Max production would be hindered due to problems with some parts.

The S&P 500 gained 0.79%, the Dow advanced 1.2%, the NASDAQ inched 0.29% higher, and the Russell 2000 rose 0.49%.  A higher-than-expected Core CPI reading shifted the entire US yield curve higher. The 2-year yield increased by fourteen basis points to 4.10%, while the 10-year yield jumped twelve basis points to 3.52%.  Oil prices continued to move higher, with WTI prices increasing by 2.29% or $1.85 to $82.55 a barrel.  Gold prices fell by $7.60 to close at $2017.20 an Oz.  Copper prices increased by $.09 or 2.2% to $4.11 an Lb.  Of note, Bitcoin traded above $30,000 as cryptocurrencies have garnered more attention from global banking concerns and the notion that the US Dollar will face challenges to its reserve currency status.

Economic news was centered on the Consumer Price Index, which showed an increase of just 0.1% in March; the street was looking for a rise of 0.3%.  The headline number increased 5% year-over-year, down from February’s 6% increase.   Core CPI which excludes food and energy from the calculation, increased by 0.4%, in line with expectations.  The Core reading increased by 5.6% in March, up from 5.5% in February.  This increase through a kink into the idea that the Fed should pause in the May meeting. Producer prices also showed moderation. The headline PPI fell by 0.5% when the street expected it to increase by 0.1%.  The Core reading came in at -.01 versus the consensus estimate of 0.2%.  On the labor front, we say Initial Claims increase by 11k to 239K and Continuing Claims decrease by 13k to 1.810m.  Retail sales announced on Thursday also showed the consumer pulling back from spending.  Retail sales fell by 1% against expectations of a 0.4% decline.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 4/7/2023

-Darren Leavitt, CFA

The holiday-shortened week saw low volumes in trading, where countercyclical sectors and US Treasuries were favored.  The week started with the announcement that OPEC + would cut oil production by 1.16 million barrels a day.  The news sent crude 7% higher, squeezing shorts and renewing calls that crude could top $100 a barrel in the next year.  Interestingly, the move to cut production comes after UBS’s takeover of Credit Suisse and may be seen as an initial consequence of how the takeover was managed.  The banking sector had a rough week after JP Morgan’s CEO Jamie Diamond suggested in his annual letter to shareholders that the regional banking crisis is not over and that there will be repercussions for years.

The S&P 500 gained 1.34%, the Dow added 1.1%, the NASDAQ climbed 0.62%, and the Russell 2000 gave back 2.66%.  US Treasuries were bid up across the curve, with the shorter tenors acting just a bit better.  The 2-year yield decreased twenty-five basis points to 3.81%, while the 10-year yield fell by twenty basis points to 3.29%.  The move in Treasuries came as economic data reported on the week was weaker than expected.  Oil prices rallied $5.32 or 7% on the OPEC+ cuts, closing at $80.70 a barrel.  Gold eclipsed the $2000 an Oz level, gaining $38.10 to close at $2024.80 an Oz.  Copper prices decreased by $0.06 to $4.02 an Lb.

Economic data reported for the week was softer than expected.  ISM Manufacturing posted its 5th consecutive contractionary reading of 46.3%, lower than the expected 47.5%.  ISM Non-Manufacturing also posted a weaker-than-expected figure of 51.2%.   JOLTS data showed job openings of less than 10 million (9.931M) for the first time since 2020. ADP employment showed fewer payrolls added than expected at 145k versus 205k.  Initial Claims ticked above 200k to 228k, and the prior week’s number was revised to 246k.  Continuing Claims increased to 1.823M from the preceding week’s 1.689m.  The Employment Situation Report was reported on Friday with the US equity markets closed.  Non-Farm Payrolls came in at 236k versus the consensus estimate of 240k, while Private Payrolls increased by 189k- the street was looking for an increase of 220k.  The Unemployment rate ticked lower to 3.5% from 3.6%, while Average Hourly Earnings increased by 0.3%, in line with the consensus forecast.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 3/31/2023

-Darren Leavitt, CFA

Global equity markets ended the first quarter with impressive gains as concerns surrounding the banking system eased.  A two-day congressional hearing on the failure of Silicon Valley Bank catalyzed the call for more banking regulation; at the same time, government officials called for extending and expanding the Fed’s emergency lending facility.  Additionally, the FDIC announced that it had sold $72 billion in SVB’s assets to First Citizens Bancshares.  The financial sector traded higher on the week but was off more than 6% in March.  The rally in equity markets was also propelled by US PCE data that showed a slight moderation in prices.

The S&P 500 gained 3.48% on the week, retook and held its 50-day moving average of 4017, and closed at 4109.  The S&P 500 advanced 3.51% for the month and is up 7.03% for the year.  The Dow rallied 3.22% for the week, the NASDAQ increased by 3.37%, and the Russell 2000 added 2.78%.  The symmetrical weekly returns suggest a good dose of quarter-end window dressing as portfolio managers rebalanced their books.

Treasuries sold off across the yield curve after a Wild Toads ride over the month.  The 2-year yield increased by twenty-nine basis points to 4.06% but shed seventy-four basis points in March and thirty-six basis points in the first quarter.  The 10-year yield increased by eleven basis points to 3.49% but decreased by forty-three over March.  The US yield curve remains inverted, with the 2-10 spread narrowing to fifty-seven basis points.  Of note, Fed Fund futures suggest a 50-50 chance that the Fed will increase their policy rate by another 25 basis points in their May meeting.

West Texas Intermediate crude ended the month with a strong rally as well.  WTI prices retook the $70 price level gaining $6.15 or 8.8% to close the week at $75.38 a barrel.  Gold prices closed the month at $1986.70 on muted traded.  Copper prices advanced $0.02 to close at $4.08 an Lb.

Economic data for the week showed mixed results on how the consumer feels about the economy, a resilient labor market, and further moderation in inflation.  March Consumer Sentiment came in below expectations of 63.4 at 62, while March Consumer Confidence was better than the expected 101.5 at 104.2. The reports showed that consumers were able to weather the banking crisis and think inflation is expected to come down, but at the same time, they are worried about their economic futures.  Initial jobless claims increased by 7k to 198k, while Continuing Claims increased by 4k to 1.694 million.  Personal Income came in line at 0.3%, while Personal Spending came in slightly lower than expectations at 0.2%.  PCE, the preferred measure of inflation by the Fed, came in at 0.3% on a month-over-month basis and was up 5% on a year-over-year basis, down from 5.3% in the prior month.  Core PCE came in at 0.3% in February and was up 4.6% year-over-year, down from 4.7%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 3/24/2023

-Darren Leavitt, CFA

Global markets sighed in relief with the announcement that the Swiss National Bank had brokered a deal, combining Credit Suisse with UBS. Investors had been worried that troubles within Credit Suisse could have spiraled into a systemic problem for the global banking system. Global central banks infused more liquidity into the system to avoid further deterioration in bank confidence. At the same time, the US Treasury mulled the idea of insuring all deposits in the banking system. These combined efforts gave banks a steady footing at the beginning of the week.

Midweek, Fed Chairman J Powell announced the decision to hike the Fed Funds rate by another 25 basis points to 4.75%-5%. The post-announcement comments made by the Chair and the Summary of Economic Projections indicate that the Fed is close to the end of its interest rate hiking cycle with a terminal rate of 5.10% but also signaled that the Fed has no plans to cut rates until next year. The market had been pricing in 3 rate cuts from June through December 2023. Realizing that higher rates could be in place for longer hit equity markets and favored safe-haven assets. US Treasuries rallied across the curve, with more prominent buying on the short end.

Additional banking worries showed up later in the week when Deutsche Bank shares sold off on the fact that its Credit Default Swaps had traded to a 4-year high. Credit Default Swaps are used to insure a company’s debt obligations. The US market stabilized and traded higher on Friday as the European markets closed.  The action in DB’s CDS market is troubling and reintroduced fears of something breaking within the banking system.

The S&P 500 gained 1.4%, the Dow added 1.2%, the NASDAQ increased by 1.7%, and the Russell 2000 closed higher by 0.5%. The US 2-year yield declined, falling five basis points to 3.77%. The 10-year yield fell by three basis points to 3.38%. Oil prices took a step back, with WTI prices falling 3.4% or $2.36 to $66.87 a barrel. Gold prices increased by $7.6 to $1983 an Oz.  Copper prices jumped $0.16 to $4.06 an Lb.

The economic calendar included data that suggest the labor market continues to be strong. Initial Claims came in at 198k versus the consensus estimate of 204k. The 4-week moving average continues to be less than 200k. Continuing Claims increased by 14k to 1694m. Preliminary Manufacturing PMIs generally continued to be in contraction but showed an uptick. Services PMIs generally showed expansion with increasing results. New Home Sales came in lighter than expected at 640k; the street was looking for an increase of 685k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 3/17/2023

-Darren Leavitt, CFA

Financial markets continued to be erratic as investors assessed the health of the global banking system. The failures of Silicon Valley Bank and Signature Bank were met with multiple responses from the federal government and the private sector to restore confidence in the system; however, concerns about what may still be undermining the system are top of mind for Wall Street and conjured up memories of the great financial crisis.

First Republic Bank, which initially seemed to be a beneficiary of deposits, leaving SVB, was met with mass client departures, which cascaded into a selling frenzy in bank stocks. An uninsured deposit of $30 billion from eleven banks, including JP Morgan, Bank American, and Wells Fargo, initially stemmed the selloff and produced a nice bounce in banking stocks. Still, it was short-lived after the bank announced that it would halt its dividend and that the bank had materially tapped the Fed’s discount window for more liquidity. Multiple downgrades by Wall Street did not help the matter, as some analysts questioned if the bank was worth anything.

Not helping matters, Credit Suisse, a major global bank, came under pressure as its largest shareholder, the Saudi National Bank indicated that it would not put more capital into the bank for several reasons and noted regulatory changes that would incur if it became a greater than 10% owner. The announcement again cast more doubt into the banking system and Credit Suisse as a going concern which induced the Swiss National Bank to inject $53 billion into the bank. Other global banks, in response, backed away from doing business with CS on counterparty risk concerns. As I write, there are reports that CS and UBS are in talks for some deal, a notion dismissed entirely as an option earlier in the week.

The uncertainty of whether this is an isolated issue with a few banks or one that has systemic implications has produced wild swings in the US Treasury market. The 2-year yield is down over 100 basis points in two weeks with significant daily fluctuations.   Safe-haven assets have become vogue again, with Gold approaching $2000.oo an Oz. Interestingly, large-cap Tech was also well bid with the idea that these companies are a place to weather the storm because they have war chests of cash and solid balance sheets. Also of note, Tech generally benefits from lower rates.

The Fed’s decision on their policy rate due in the coming week has also been a prominent debate. The European Central Bank went ahead with a 50 basis point increase in their policy rate, and ECB officials said more hikes were likely needed to get inflation in check. I am in the camp that the ECB’s move gives the Fed cover for a 25 basis point hike but that the Fed will telegraph a pause to assess upcoming inflation data and the current banking situation. Fed Funds futures currently assign a 70% probability of a 25 basis point hike. Something also to consider over the next several months is the possibility of more divergent global central bank policy. If the US is set to pause, perhaps while the ECB continues to raise rates and China adds more stimulus- it will have multiple implications for multiple asset classes.

The S&P 500 gained 1.4%, the Dow fell 0.1%, the NASDAQ climbed 4.4%, and the Russell 2000k lost 2.6%. The S&P 500 closed below its 200-day moving average (3937) and is in an area that is being closely watched as support/resistance. The US Treasury curve flattened as the 2-year note yield fell seventy-seven basis points to 3.82%, and the 10-year yield fell thirty basis points to 3.40%. Oil prices fell 13.5% as WTI closed below $70 a barrel at $66.87. Concerns over global growth and data that showed Russia continues to pump oil while supplies are in surplus were cited as reasons for the steep selloff. Gold prices soared nearly 6% or $108.30 to $1975.40 an Oz on a flight to safety bid. Copper prices fell $0.11 to $3.90 an Lb. The US Dollar was weaker on the notion of a Fed pause and lower rate differentials.

The economic data calendar was stacked this week and generally gave the impression that inflation continues to moderate but still is at an unacceptable elevated level. The February Consumer Price Index came in line at 0.4%, up 6% on a year-over-year basis, down from 6.5% in January. The Core CPI, which excludes food and energy, came in lower than expected at 0% versus the consensus of 0.4%. On a year-over-year basis, the core number was up 5.5% relative to a 5.6% increase in January. Producer prices also improved at -.1% on the headline number and flat on the core number. February Retail Sales indicated that the consumer showed more discretion in their purchasing. The headline number decreased by 0.4% versus the consensus estimate of a 0.2% gain. Initial claims fell below 200k to 192K, and Continuing Claims regressed to 1.684M from 1.713m.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 3/10/2023

-Darren Leavitt, CFA

Wall Street endured a difficult week with volatile fluctuations in equity and fixed-income markets. Fed President J Powell’s testimony in front of congress kicked off the market’s chaotic week when he suggested a higher terminal policy rate and that the policy rate would probably remain elevated for some time. The Fed Chair’s remarks on the first day of testimony to The Senate Banking Committee and the House’s Financial Services Committee initially moved the probability that the Fed would raise rates by another 50 basis points in the March meeting to nearly 80%. By the end of the week, the probability had fallen to below 30%. The February Employment Situation report and, more likely, the collapse of Silicon Valley Bank strengthened the argument for a 25 rather than a 50 basis point rate hike.

The Employment Situation report gave hawks and doves something to justify their positions. The headline number showed better-than-expected job creation with 311k new payrolls; the street was looking for 205k. Similarly, the Private Payrolls number of 261k beat expectations of 203k.   The strong payrolls number would generally reinforce the need for more rate hikes; however, countering that argument, the Unemployment rate ticked higher to 3.6% from 3.4%, and the Average Hourly earnings figure came in below expectations of 0.3% at 0.2%. The higher unemployment rate came as Initial Jobless Claims for the week finally topped 200k, and Continuing Claims data showed a 69k increase to 1.718M.

The ripple effects from the collapse of Silicon Valley Bank are just starting to manifest themselves. Yes, on Friday, equity shareholders felt the full blow of not having the stock reopen. Still, multiple ramifications are yet to play out, and while contagion to much larger banks has initially been pushed aside, investors were reminded of how quickly things can deteriorate. The run on the bank was induced by the realization that it had made some questionable investments, its exposure to the highly speculative venture capital markets, and a call to withdraw deposits to start-up companies from a well-renowned venture capitalist, Peter Thiel. The latter seemed to be the death nail, as deposits left the bank faster than the bank could raise capital or find a white knight to stop the hemorrhaging. The collapse pulled back expectations that the Fed will raise the policy rate by 50 basis points and has complicated an already tricky financial landscape. The safe-haven ballast of US Treasuries, which has been absent for some time, returned to markets last week, and ironically, this return may trouble the financial sector further.

The S&P 500 fell 4.5%, the Dow lost 4.4%, the NASDAQ shed 4.7%, and the Russell 2000 tanked 8.1%. Of no surprise, financials showed the most weakness last week, especially regional banks. Of note, the S&P 500 broke the key technical levels of the 50-day and 200-day moving averages and will have some work to reclaim those levels to stave off a further technical decline. In contrast, a safe-haven bid was ever-present in the US Treasury market as yields fell across the curve. The 2-year note yield fell twenty-seven basis points to 4.59%, while the 10-year yield fell by twenty-six basis points to 3.7%. Oil prices fell 3.8% or $3.11 to close at $76.68 a barrel. Gold prices advanced by $12.90 to $186.10 an Oz, and Copper prices fell $0.05 to $4.01 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 3/3/2023

-Darren Leavitt, CFA

US equity markets bounced on oversold conditions and their ability to hold key technical levels this week.  The S&P 500 broke its 50-day moving average (3980) and then tested the 200-day moving average (3940) twice but ended the week well above the 50-day. However, the US Treasury market continued to sell off, pushing yields on the front end of the curve higher.  This week, the 10-year yield eclipsed 4% and traded as high as 4.07%. Stronger-than-expected price data within a couple of economic data series promoted the move in yields alongside hawkish tones from Federal Reserve officials.  In Minneapolis, Fed President Kashkari suggested he would move his policy rate projections higher. At the same time, Atlanta Fed President Bostic expects the Fed to take rates to 5%-2.25% and hold them there until 2024.

The S&P 500 gained 1.9%, the Dow rose 1.7%, the NASDAQ added 2.6%, and the Russell 2000 increased by 2%.  The US Treasury curve inverted more this week, with the 2-year note yield increasing eight basis points to 4.86% and the 10-year yield increasing by one basis point to 3.96%.  The dollar index shed 0.7%, closing at 104.5.  Oil prices rose 4.6% to $79.79 a barrel partly on strong economic data out of China and on reports that the UAE may leave OPEC.  Gold prices increased by 2% or $37.20, closing at $1854.20 an Oz.  Copper closed at $4.06, an Lb up $.10.

ISM Manufacturing came in a little less than expected at 47, but the prices paid component showed the first uptick in over four months.  The print came in at 51.3, and the street had been looking for it to come in at 44.5%.  ISM Services also pulled back slightly on the headline at 55.1 versus the consensus estimate of 55.5.  Unit Labor Costs in the Productivity report showed an increase of 3.2%, adding to the narrative that wages are not cooling.  Initial Jobless Claims showed a resilient labor market, with claims coming in again under 200.  Continuing Claims also fell to 1655k from 1660k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 2/24/2023

-Darren Leavitt, CFA

It was another tough week on Wall Street as US equity markets continued to retreat alongside a sustained selloff in the US debt markets. The calendar was again stacked with economic data showing an economy growing nicely with a resilient labor market but with stubbornly higher prices. The minutes from this month’s Federal Open Market Committee meeting offered nothing new but did reinforce the notion that the Federal Reserve still has a long way to go to get inflation to its target rate of 2%. Market pundits pushed back on the idea of a no-landing scenario where the economy could continue to grow alongside elevated inflation with a standoffish Fed. However, St Louis Fed President James Bullard supported the idea of a soft landing where prices moderate and the economy avoids a recession.

Weak earnings from Consumer Staples/Discretionary stalwarts Walmart and Home Depot also troubled investors. Chip maker NVidia had a great quarter and continued to ride the recent AI wave.

The S&P 500 lost 2.7%, breaking its 50-day moving average (3980) but found intraday support at its 200-day moving average (3940). Investors will watch that 200-day moving average for clues on the market’s next move. The Dow shed 3% and is now negative 1% for the year. The NASDAQ gave back 3.3%, and the Russell 2000 fell 2.9%.

The US Treasury market continued to sell off across the curve. Bond prices fall as their yields rise. The 2-year yield increased by seventeen basis points to 4.78%, while the 10-Year bond yield increased by twelve to 3.95%. The higher yields prompted a strong rally in the US dollar, with the DXY index rising by 1.4% on the week. Conversely, commodity prices fell.   WTI fell 0.1% on the week closing at $76.41 a barrel. Gold prices fell by $36.90 to $1817 an Oz.  Copper prices fell by $0.15 to $3.96 an Lb.

The 2nd estimate of fourth-quarter GDP came in at a resilient 2.74% growth rate but was accompanied by a higher-than-anticipated GDP Price Deflator of 3.7%.   Core PCE, the Federal Reserve’s preferred measure of inflation, also came in hotter than expected at 4.7% on a year-over-year basis. Preliminary February IHS Markit Manufacturing and Services PMIs were better than expected at 47.8 and 50.5, respectively. Existing home sales came in at 4 million versus an estimated 4.12 million, while weekly Mortgage Applications fell by 13.3%. Initial Jobless claims came in at 192k, while Continuing Claims fell by 37k to 1.654M.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 2/17/2023

-Darren Leavitt, CFA

US equity markets finished the week mixed, as economic data reported during the week indicated that inflation remains elevated.  Fed rhetoric was prevalent and had a more hawkish tilt.  Cleveland Fed President Loretta Mester suggested that she was in favor of a 50-basis point hike in the most recent FOMC meeting and put a 50-basis point on the table for March.  The hotter inflation data and the strong January Employment Situation Report have also increased the likelihood of a third interest rate hike at the June meeting. The bond market took note and sold off across the curve for the second consecutive week.

Currently, there appears to be a disconnect between the equity and bond markets.  Bonds have had a meaningful selloff on the most recent data, while equities have all but shrugged off the stronger-than-anticipated economic data.  This comes as equity valuation metrics have soared while earnings estimates are seemingly too high and poised to be cut.  Also of note, is the significant divergence between growth and value performance within equities.  Last year’s losers appear to be thus far this year’s winners and vice versa.  Institutional rebalancing and a profound January effect may well be the reason for the divergence.

For the week, the S&P 500 lost 0.3%, the Dow shed 0.1%, the NASDAQ gained 0.6%, and the Russell 2000 rose 1.4%.  The US Treasury yield curve had another shift higher as all tenors sold off.  The 2-year note yield increased by ten basis points to 4.61% but traded as high as 4.71%.  The 2-year yield has risen by thirty-two basis points over the last two weeks.  The 10-year yield increased by nine basis points to 3.83% and is up thirty basis points over the previous two weeks.  Oil prices tumbled 3.7% or $2.91 to $76.57 a barrel.  Gold prices fell $22.60 to close at $1851.30 an Oz.  Copper prices advanced by $.09 or 2.2 percent, closing at $4.11 an lb.

The economic data calendar was stacked this week.  The Consumer Price Index came in line on the headline and core numbers at 0.5% and 0.4%, respectively.  On a year-over-year basis, consumer prices continued to be robust, up 6.4% on the headline and up 5.6% on the core reading that excludes food and energy.   Shelter costs continued to be strong, an area the Fed has voiced concern over.  The Producer Price Index was hotter than expected on the headline and core numbers, coming in at 0.7% and 0.5%, respectively.  Retail Sales showed a robust consumer in January.  Retail sales increased by 3% versus the consensus estimate of 1.7%.  The labor market continues to show no signs of weakness as Initial Claims data for the week showed another sub 200k reading while Continuing Claims came in at 1.696k.  Finally, January Industrial production came in a bit light at 0% versus the estimate of 0.5%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 2/10/2023

-Darren Leavitt, CFA

Wall Street pulled in its horns last week as investors sensed the market was overbought. Concerns about the outlook for corporate earnings and historically high valuations tempered buyers’ enthusiasm for equities. The prior week’s robust Employment Situation Report continued to weigh on investors’ sentiment as the realization that the Federal Reserve may need to hike more started to resonate. The entire yield curve shifted higher by roughly twenty basis points, and the probability of another 25 basis point hike from the Fed in May increased from 30% to 74%. Fed rhetoric throughout the week also supported the notion of a higher Fed Funds terminal rate.

Tensions between the US and China increased as the US shot down what appeared to be a Chinese spy balloon off the coast of South Carolina. President Biden’s State of the Union address had little effect on the markets as an agenda of more taxes and regulation will likely be squashed in a divided Congress.

Economic news on the week was relatively light. Initial claims came in at 196k versus the estimated 200k, while continuing claims came in at 1688k, up from the prior week’s reading of 1650k. The preliminary reading of the University of Michigan’s Consumer Sentiment was a tad higher than expected at 66.4. In the coming week, the economic data calendar will be packed with the Consumer Price Index, the Producer Price Index, Retail Sales, Industrial Production, and Housing starts.

The S&P 500 lost 1.1%, the Dow fell 0.2%, the NASDAQ gave back 2.4%, and the Russell 2000 declined 3.4%. US Treasuries endured a tough week as the 2-year note yield increased by twenty-two basis points to 4.51%. The 10-year bond yield rose by twenty-one basis points to 3.74%. The higher yields prompted a bid into the US Dollar, which has fallen nearly 10% from its most recent high. Oil prices rallied 8.7% over the week as Russia threatened to cut its oil production by 500,000 barrels per day in retaliation to international sanctions.   Gold prices were little changed, falling by $2.20 to close at $1873.90. Copper prices shed $.04, closing at $4.02 an Lb. Bitcoin fell nearly $2000 over the week to close at $21,892.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 2/3/2023

-Darren Leavitt, CFA

Investors were hit with a full dose of market-moving events and data throughout the week. The Federal Reserve, Bank of England, and European Central Bank increased their respective policy rates. The Fed raised its policy rate by 25 basis points to a range of 4.50% to 4.75%. The move was widely expected, but the tone of Federal Reserve Chairman J. Powell’s remarks in Q&A prompted investors to buy the market. The Chairman acknowledged that goods inflation has moderated and used the term disinflation throughout the Q&A.  Powell also shrugged off the market’s recent advance and its impact on loosening financial conditions and kept the possibility of a soft landing on the table. US Treasuries rallied significantly on the Chair’s commentary but gave the gains up the following day on an extremely strong Employment Situation Report.

There was a ton of economic data that hit the tape this week. The Employment Situation Report showed Non-Farm Payrolls increased by 517k- the consensus estimate was for a gain of 190k payrolls. The 3-month average of Non-Farm Payrolls increased to 356K from 291k in December. Similarly, Private Payrolls increased by 443K versus an estimated 175k. The Unemployment rate decreased to 3.4%, the lowest level since 1969 and below the expected uptick of 3.6%. Average Hourly earnings were in line with expectations of 0.3%; on a year-over-year basis, wage growth ticked down to 4.4% from 4.8% in December. JOLTS data showed more than 11 million job openings in January, up from 10.45 million in the prior reading. Initial Claims came in less than expected at 183k, and Continuing Claims ticked down to 1655k from 1666K. So despite all the layoff headlines we have seen recently, the labor market looks robust and could present a problem for the Fed in taming inflation. That said, much of this data is backward-looking, which leaves the door open for a moderating labor market in the next few months of data. ISM Manufacturing continued to show contraction with a reading of 47.4%, while ISM Services data showed an expansionary reading with a better-than-expected print of 55.2%.

Fourth quarter earnings continued to roll in with some significant results. Meta surprised the street by beating expectations, announcing more cost-cutting measures, and increasing its share repurchase program to $40 billion. The stock’s price soared 23% on the week. On the other hand, Apple, Merck, Honeywell, Google, Amazon, Starbucks, and Ford delivered disappointing results.

The S&P 500 gained 1.6%, the Dow sank 0.2%, the NASDAQ advanced 3.3%, and the Russell 2000 increased by 3.9%. This week, the US Treasury market had a wild ride with massive moves catalyzed by the FOMC meeting Q&A and the Employment Situation Report. The 2-year note yield increased by eight basis points to 4.29%, while the 10-year bond yield increased by one basis point to 3.53%. Commodity prices took a hit this week. WTI Oil prices fell 7.7% to $73.28 a barrel. Gold prices fell by $52.90 or 2.8% to close at 1876.70 an Oz.  Copper prices lost 0.17 or 4% to close at 4.05 a Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 1/27/2023

-Darren Leavitt, CFA

Momentum trade pushed US equity markets higher and forced shorts to cover and those sitting in cash to move off the sidelines for fear of missing out on further gains. Fourth quarter earnings continued to come in with a mixed bag of results. According to Factset, 29% of the S&P 500 has reported 4th quarter earnings. Last week MMM, Microsoft, Texas Instruments, Boeing, Intel, and Chevron announced worst-than-expected results.   On the other hand, defense companies Raytheon and Lockheed Martin had better than expected results, along with consumer discretionary giant Tesla. In the energy complex, Chevron announced a record $75 billion share buyback and increased its dividend but disappointed investors with its earnings results.

The S&P 500 gained 2.5% and extended ground relative to its 200-day moving average. The Dow added 1.8%, the NASDAQ jumped 4.3%, and the Russell 2000 increased by 2.4%. US Treasury yields were higher across the curve but noticeably higher in the belly of the curve. The 2-year yield increased by one basis point to 4.21%, while the 10-year yield increased by four basis points to 3.52%. Oil prices fell 2.7%, with WTI closing at $79.45 a barrel. Gold prices were little changed, closing at $1929.60 an Oz.  Copper prices fell by $0.04 to $4.22 an Lb.

Economic data for the week showed a resilient economy with prices moderating. Initial jobless claims came in at 186k below the expected 200k while Continuing Claims increased to 1675k from 1655k. The first look at the 4th quarter GDP indicated a better-than-expected 2.9% growth rate; the street had been looking for 2.8%. The GDP chain deflator, which accounts for all economic prices, ticked a bit higher to 3.5% from the prior reading of 3.3%. Personal spending declined by 0.2%, while Personal Income increased by 0.2%. PCE (Personal Consumption Expenditures Price Index) increased by 0.1%, slightly higher than the 0% expectation. Core PCE, which excludes food and energy, was in line with estimates of 0.3%. On a year-over-year basis, PCE rose by 5% versus the prior month’s increase of 5.5%. Core PCE rose by 4.4% year-over-year relative to the preceding month’s 4.7% increase.

This coming week investors will get another tranche of 4th quarter earnings highlighted by Google, Meta, and Apple. The FOMC meeting with conclude on Wednesday, where it is widely expected that the Fed will raise its policy rate by 25 basis points. Markets will also be very interested in the January Employment Situation report due on Friday morning for clues on how the labor market is holding up.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 1/20/2023

-Darren Leavitt, CFA

Inflation data showed prices easing in the US and Europe while Japanese CPI hit a level not seen since the 1980s.  The downtrend in US producer prices, coupled with weaker-than-expected US retail sales and a massive decline in the Empire State Manufacturing reading, fostered the notion that the Federal Reserve is nearing an end to tightening monetary policy. Continued corporate layoff announcements also suggested that employment data should begin to cool; however, this week’s Initial Claims data showed nothing of the sort.  Federal Reserve officials’ rhetoric continued to toe the line suggesting that the Fed is not finished and that rates will be higher for longer.

It is widely expected that the Fed will raise its policy rate by 25 basis points on the first day of February, while another 25 basis point hike at the March 23rd meeting is currently assigned a 79.1% probability.  If this scenario plays out, the Fed’s policy rate will end March at 4.75% to 5%, which some suggest is where the Fed will pause and wait for more data before increasing rates further.

4th quarter earnings were mixed over the week and highlighted by a substantial miss from Goldman Sachs, a solid quarter from Morgan Stanley, and a better-than-expected increase in paid subscribers at Netflix that propelled its stock higher.

The S&P 500 fell 0.7%, the Dow sank 2.7%, the NASDAQ managed a gain of 0.6%, and the Russell 2000 shed 1%.  US Treasuries inked another week of gains but sold off hard at the end of the week.  The 2-year yield fell by two basis points to 4.20%, while the 10-year yield fell by three basis points to 3.48%.

The US Dollar continued to weaken but had a strong week against the Japanese Yen as Japan’s central bank announced no changes to its ultra-accommodative policy.  Oil prices increased by $1.88 or 2.3%, with WTI closing at $81.67 a barrel.

Gold prices increased by $6.20 to close at $1928.80 an Oz.  Copper prices increased by a nickel to $4.26 an Lb.  Of note, Bitcoin surged to $23,147 a token.

Economic news showed Producer Prices moderating.  Headline PPI fell 0.5% versus expectations of a 0.1% decline.  On a year-over-year basis, PPI fell to 6.2% in December from 7.3% in November.  The Core reading also declined year over year to 5.5% from 6.2%.  US Retail sales fell 1.1% versus the consensus estimate of -.8%. The Empire State Manufacturing survey showed a decline of 32.9% versus an expected decline of 11%- this was the steepest decline for this data series since its inception.   On the labor front, Initial Claims were 190k versus the 212k expected, and Continuing Claims increased to 1647k from 1630k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 1/13/2023

-Darren Leavitt, CFA

Equity markets continued to rally in the second week of January as investors considered the idea of a Fed-orchestrated soft landing. An inline December CPI showed consumer prices falling on the headline number and core reading. The moderation of prices increased the probability that the Fed would end rate hikes in May at a terminal rate of 4.75% to 5%. Another catalyst was a positive call from Goldman Sachs that suggested that Europe would avoid recession. Their call, coupled with a continued reopening of China, helped advance international markets. Fourth quarter earnings started in earnest, with many banks reporting numbers on Friday. The results were generally solid; however, most banks increased their loan loss provisions in anticipation of a slowing economy.

The S&P 500 regained its 50-day moving average and 200-day moving average, closing just below 4000, a level not seen since mid-December 2022. The S&P 500 advanced 2.7%, the Dow rose 2%, the NASDAQ added 4.8%, and the Russell 2000 increased by 5.3%. The Information Technology sector, along with the Consumer Discretionary sector, led while Consumer Staples and Healthcare sectors lagged.

US Treasuries advanced for a second week in volatile trade. The 2-year yield fell five basis points to 4.22%, while the 10-year yield decreased by ten basis points to 3.61%. Of note, Treasury Secretary Jane Yellen warned of the dire consequences if Congress cannot agree on increasing the debt ceiling, which is expected to be reached next week. Given the current state of Congress, the debate will be much more contentious and perhaps push the deadline for a resolution leading to increased market volatility, specifically within the rates markets.

Commodity markets were also well bid over the week as the US Dollar index fell 1.7% to a seven-month low. Oil prices increased by 8.2% or $6.05, closing at $79.79 a barrel. Gold extended its rally with a 2.8% advance to close at $1922.50 an Oz.  Copper prices jumped $.30 to $4.20 a Lb.

The December Consumer price index highlighted economic news. The headline number fell by 0.1% versus the estimate of 0%, while the Core number, which excludes food and energy, increased by 0.3%, in line with expectations. On a year-over-year basis, the headline number fell to 6.5% from November’s 7.1%, while the Core number fell to 5.7% from 6%. The labor market continued to show resilience, with Initial Jobless claims coming in at 205k versus the estimated 210K. Continuing claims fell to 1.634m from 1.697m. The preliminary University of Michigan Consumer Sentiment for January showed an uptick to 64.6 from the final reading in December of 59.7. The better sentiment centered on easing inflation and better personal finances/earnings.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 1/6/2023

-Darren Leavitt, CFA

The start of the New Year brought volatility with it. Markets sold off early in the week and tested a critical technical level on the S&P 500 (3800), then bounced significantly to regain support and end the week with a nice gain. Investors heard from several Federal Reserve officials, viewed the December FOMC minutes, and were provided plenty of economic data to digest. Also of note was the stalemate in Congress to appoint the next Speaker of the House and more layoffs announced at tech stalwarts Amazon and Salesforce.com.

Federal Reserve rhetoric continued to be hawkish as Bullard, George, and Kashkari reminded investors that rates will likely need to be higher and higher for longer. Kashkari was perhaps the most hawkish suggesting the Fed’s policy rate would need to go to 5.4% and maybe more if inflation continued to be persistent. The rhetoric was echoed in the December FOMC minutes, where all participants indicated there would not be a rate cut in 2023.

This week, investors were focused on the labor market data for clues on what the Fed might do in their next meeting. JOLTS data continued to show robust job openings with a print of 10.458 million. ADP data showed a much stronger pick-up in new payrolls, 235k versus the street estimate of 169k. High-frequency data on initial and continuing claims showed little signs of a cooling labor market. Initial Claims came in at 204k; the street was looking for 230k. Continuing claims fell to 1694k from 1718k in the prior week. The December Employment situation report showed 223k Non-Farm Payrolls were created and 220k Private Payrolls. Both metrics were stronger than expected. Surprisingly, the Unemployment rate fell to 3.5% from 3.7% in November. The most confounding data came from the Average Hourly Earnings, where wage growth decelerated to 0.3% from a revised 0.4% reading in November.  Interestingly, wages grew faster in goods-producing jobs while service wages grew slower. Markets cheered the news on the notion that the economy may be able to avoid recession as wage growth decelerates. Notably, ISM Manufacturing and Non-Manufacturing data showed continued slowing, and both economic areas are now in contraction.

The S&P 500 gained 1.4%, the Dow increased by 1.5%, the NASDAQ climbed 1%, and the Russell 2000 inked an advance of 1.8%. US Treasuries rallied across the curve, sending yields significantly lower. The 2-year yield fell by fifteen basis points to 4.27%, while the 10-year yield fell by thirty-two basis points to 3.56%. Oil prices fell 7.7% or $6.16 to $73.74 a barrel. Gold prices increased by 2.2%, closing at $1869.30 an Oz.  Copper prices also rallied 2.6% or $0.10 to close at 3.91 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/30/2022

-Darren Leavitt, CFA

Financial markets finished the final week of 2022 trading with a whimper.  Year-end tax-loss harvesting and asset class rebalancing accounted for much of the volume in light trade.  The technical level of 3800 was able to be held but was certainly tested as a year-end rally failed to materialize.

The S&P 500 lost 0.1%, the Dow dropped 0.2%, the NASDAQ fell 0.3%, and the Russell 2000 ended the week flat.  US Treasuries sold off across the curve.  For the year, the S&P 500 closed down 19.4%, the Dow shed 8.8%, the NASDAQ tumbled 33.1%, and the Russell 2000 gave back 21.6%.

The 2-year yield increased by ten basis points to 442%, while the 10-year yield increased by thirteen basis points to close at 3.88%.   The 2-year yield increased by 369 basis points in 2022, while the 10-year yield increased by 237 basis points.

Oil prices were little changed on the week losing $0.31 to close the year at $79.29 a barrel.  Gold prices closed higher by $23.30 to $1827.50 an Oz.  Copper prices were unchanged over the week, closing at $3.81 an Lb.

Economic data for the week was limited.  November Pending home sales decreased by 4%, which was well below the consensus estimate of a 1% increase.  Initial Jobless claims came in line at 225k while continuing claims continued to tick higher, coming in at 1710k.  Next week investors will vet ISM Manufacturing and Non-Manufacturing data and the December Employment Situation report.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/23/2022

-Darren Leavitt, CFA

The S&P 500 incurred its third straight weekly loss as investors assessed the increasing likelihood of a global recession and its impact on current earnings estimates.  Markets also had to contend with a surprise move from the Bank of Japan that expanded its yield curve control policy in the 10-year JGB to +/- 50 basis points from +/- 25 basis points.  The BOJ left its policy rate at -.10%.  The tightening move put a massive bid into the Yen, which gained nearly 4% against the US Dollar and catalyzed a strong sell-off in US Treasuries.  The week saw Congress pass a 1.7 trillion dollar government funding bill that President Biden will sign into law this week. There was also plenty of economic data to digest throughout the week.

The S&P 500 lost 0.2% this week, the Dow gained 0.9%, the NASDAQ shed 1.9, and the Russell 2000 gave up 0.1%.  The US Treasury curve steepened, with the 2-year yield increasing by eleven basis points to 4.31% while the 10-year yield increased by twenty-seven basis points to 3.75%.   Oil prices increased by 7% or $5.29 to $79.60 a barrel.  Gold prices were little changed, advancing $3.20 to 1804.20 an Oz. Copper prices increased by $0.04 to $3.81 an Lb.

The housing market continued to cool even as Housing Starts and New Home sales data surprised to the upside.  Housing Permits and Existing Home Sales data were weaker than expected.  The third estimate of Q3 GDP came in much stronger than anticipated at 3.2%, with the GDP deflator increasing by 4.4%.  Personal Income and Spending came in line with expectations at 0.4% and 0.1%, respectively.  The Leading Economic Index was weaker than expected at -1% versus the consensus estimate of -0.5%.  Consumer Confidence and Sentiment data came in higher than anticipated at 108.3 and 59.7, respectively.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/16/2022

-Darren Leavitt, CFA

US equity markets started the week recouping from last week’s losses in hopes of a cooler CPI print and a more dovish stance from the Federal Reserve Open Market Committee.  Investors did cheer a lighter-than-expected CPI report that showed headline and core consumer prices moderating. However, a deeper look into the data showed that food, shelter, and services prices remain elevated. Headline CPI increased by 0.1% versus the consensus estimate of 0.4%. Core CPI, which excludes food and energy, increased by 0.2%, which was lower than the expected 0.3%. On a year-over-year basis, headline CPI fell to 7.1% in November from 7.7% in October. Similarly, the Core reading fell to 6% from 6.3% year-over-year.

A more hawkish than anticipated Fed Chairman and Summary of Economic Conditions catalyzed fears that the Federal Reserve will tighten monetary policy too much and send the economy into a deep recession. Investors went to the sidelines after the release of the FOMC statement and continued to sell equities off over the next couple of sessions. The Federal Reserve increased its policy rate by 50 basis points to 4.25%-4.5% and announced that it would continue to normalize its balance sheet by allowing $60 billion in US Treasuries and $35 billion in agency mortgage-backed securities to roll if its balance sheet monthly. Terminal rate forecasts provided in the Fed’s most recent dot plot increased to 5.1% from the 4.6% projected in September. 17 Fed officials predict the terminal rate to be north of 5% in 2023, while two expect a terminal rate to be north of 5.5%. This increase in terminal rate expectations suggests the Fed will continue to hike rates in 2023 and also implies no rate cuts in 2023. Interestingly, US Treasuries rallied over the week on the notion of a US recession.

Global central banks also announced more tightening of their monetary policies. The Bank of England increased its policy rate by 50 basis points along with the Hong Kong Monetary Authority, the Norges Bank, the Swiss National Bank, and the European Central Bank.   ECB President Christine Lagarde was extremely hawkish in her post-statement Q&A. She suggested that the ECB still has a long way to go with rate hikes and suggested that several more 50 basis point increases were on the table. The ECB also announced it would commence the normalization of its balance sheet. Yields on European Sovereign debt shot higher, especially in periphery markets such as Spain and Italy. Additionally, European equities sold off.

The US equity market was extremely volatile this week. The S&P 500 fell 2.1%, the Dow lost 1.7%, the NASDAQ gave up 2.7%, and the Russell 2000 retreated by 1.9%. Technically the S&P 500 gave up its 200-day moving average and then its 50-day moving average, which could portend more weakness for equities and a retest of October’s 3500 low print. The US Treasury Curve remains inverted with the 2-10 spread at -72 basis points. The 2-year yield fell by fourteen basis points to 4.2%, while the 10-year yield fell by nine basis points to 3.48%. Oil prices increased by 4%, with WTI closing at $74.31. Gold prices fell by $10 to 1801 an Oz while Copper prices fell by $0.09 to $3.77 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/9/2022

-Darren Leavitt, CFA

Markets gave back gains inked over the last couple of weeks as investors pulled off risk in front of the upcoming Federal Reserve Open Market Committee meeting. The market expects the Fed to increase its policy rate by 50 basis points on December 14th but will likely focus on the Federal Reserve’s Summary of Economic Conditions report for clues on terminal rate projections.  Of note, Australia’s and India’s central bank increased their policy rates this week. The European Central Bank is also expected to raise its policy rate by 50 basis points at their December 15th meeting.

Additional announcements of relaxed policies on testing and lockdown measures in China continued to bolster sentiment of a reopening and its effects on the global economy. Gaming stocks exposed to Macau were well-bid this week on the prospect of reopening.   The commodity market also took notice as estimates of copper prices and other industrial metals increased on the possibility of a ramp-up in Chinese demand. Interestingly, Oil had a tough week, selling off more than 10% even as Chinese delegates met with Saudi officials to solidify relations.

A stronger-than-expected ISM Services number, along with a hotter Producer Price Index figure, tempered investor’s optimism of a cooler Consumer Price Index print scheduled to be released the day before the Fed’s rate decision. ISM Services data showed the 30th month of expansion for the services sector of the economy. The reading came in at 56.2, well above the estimate of 52.5, and catalyzed selling in the equity and bond markets. The headline PPI figure came in at 0.3% versus the consensus estimate of 0.2%. The Core number increased by 0.4%, above the 0.2% expectation. On a year-over-year basis, PPI rose by 7.4%, down from October’s 8.1%. Similarly, the year-over-year core number fell to 6.2% from 6.8% in October.

The S&P 500 fell 3.7%, the Dow lost 2.77%, the NASDAQ gave back 4%, and the Russell 2000 shed 2.37%.  US Treasuries sold off across the curve as the 2-10 spread inverted to a level not seen since the 1980s. The 2-year yield increased by five basis points to 4.34%, while the 10-year yield increased by six basis points to 3.57%.

As mentioned before, Oil prices tumbled 10.8% this week despite multiple factors that should have positively affected prices.  The Price Cap of Russian oil was met with Russia saying they would curtail supply.  China officials met with Saudi officials to discuss their oil agreements. The Keystone pipeline was closed due to an oil spill.  A weaker US dollar is generally a tailwind for oil as well.  A critical technical level of $72 to $74 was breached and may portend more weakness in the coming weeks.  Gold prices were little changed, gaining $1.90 to close at 1811 an Oz.  Copper prices increased a penny to $3.86 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 12/2/2022

-Darren Leavitt, CFA

The week started with concerns regarding China’s Zero Covid policy which has led to protests stemming from continued lockdowns.  Initial concerns were tempered by reports suggesting China would slowly move away from its current Covid policy, which helped to rally Chinese stocks.  That said, there is still a sense that there will be severe consequences levied on protesters, which could lead to further unrest.

Investors received their last bit of Fed rhetoric before Fed officials enter into a quiet period ahead of the December Federal Open Market Committee meeting.  Fed Chairman Jerome Powell gave a speech at the Brookings Institute that, on the margin, came off more dovish than anticipated.  The Chairman expressed that the Fed’s rate hike path has been aggressive and that much of the effects of these rate hikes are yet to be seen.  Given the lag effect, Powell suggested that it would be prudent to moderate the pace of hikes which pushed the probability of a 50 basis point hike on December 14th to nearly 80%, and also moved Terminal Rate expectations to below 5%.  Financial markets rallied significantly on the news and prompted shorts to cover their positions.

Economic data for the week was highlighted by the November Employment Situation Report.  The robust report showed very few signs that the labor market is cooling.  Non-Farm Payrolls increased by 263k, much higher than the street’s whisper number of 188k.  Private Payrolls also came in better than the consensus at 221k.  Perhaps the most important metric in the report was Average Hourly Earnings which showed an increase in wages of 0.6% versus the expectation of 0.3%.  Interestingly, wages on the services side increased by 0.8%.  Wages increased 5.1% on a year-over-year basis, up from 4.9% in October.  The Unemployment rate remained at 3.7%, near 50-year lows.  The report was initially met with a steep sell-off in the equity and fixed-income markets.  However, investors subsequently stepped back into equities, and the S&P 500 was able to regain its 200-day moving average, which seemed to provide footing for a rally in US Treasuries.

Other economic data showed mixed signs that the economy is slowing.  ISM manufacturing data came in at 49, which puts manufacturing into contraction mode for the first time since May 2020.  Conversely, the 2nd forecast of the 3rd quarter GDP showed an uptick to 2.9% from 2.7%.  PCE, a measure of inflation, showed a slight pullback in October.  The headline number came in at 0.3% versus the consensus estimate of 0.4%, while the Core number came in at 0.2, in line with expectations. On a year-over-year basis, PCE was up 6% relative to 6.3% in September, and the Core reading was up 5% versus 5.2% in the same time frame.

The S&P 500 gained 1.13%, the Dow climbed 0.24%, the NASDAQ added 2.09%, and the Russell increased by 3.38%.   Developed international markets rose 1.67% while emerging markets increased by 4.58%.  The yield curve continued to invert despite a nice rally across the curve.  The 2-year note yield decreased by nineteen basis points to 4.29%, while the 10-year yield decreased by eighteen basis points to 3.51%.  Oil prices rallied 4.8% or $3.71, with WTI closing at $80.13 a barrel.  Reports that OPEC + may reduce production this weekend after the EU agreed to a $60 price cap on Russian oil provided a bit of a floor to the commodity.  Gold prices increased by 3% or $53.6 to close at $1809.10 an OZ. Copper prices ripped higher, gaining nearly 6.5% on the week to close at $3.85 a Lb.  The US Dollar continued to weaken, with the British Pound regaining 1.229 against the greenback and the Japanese Yen moving to 134.45.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 11/25/2022

-Darren Leavitt, CFA

Investors pushed US equities and Treasuries higher in light volume trade. The holiday-shortened week was packed with all kinds of news.

A spike in Covid cases in China increased lockdown measures and brought their major cities to a standstill. Protests within China’s “Apple City” increased concerns regarding Apple’s supply chain, which will likely lead to lower-than-expected holiday sales of higher-end iPhones.

In other corporate news, Disney announced Bob Chapek’s resignation and Bob Iger’s return. Investors cheered the report and sent Disney shares higher. The tail end of earnings produced solid results from Deere and better-than-expected results from BestBuy and Abercrombie and Fitch.

In Europe, leaders debated a price cap on Russian oil. The issue was left unresolved, but most expect a price cap to come in around $65 to $70 a barrel. Russia has countered the notion of a price cap, saying it will not sell oil to any country involved with the sanction.

Economic news focused on the release of the Federal Open Market Committee’s notes. The notes did not produce any surprises and reiterated that the majority of the committee thought at some point it would be prudent to pull back to the pace of rate hikes. It’s already widely expected that the Fed will raise its policy rate by 50 basis points rather than 75 at the December 14th meeting. A downtick in PMI manufacturing and services data fostered the idea that the economy is slowing. Manufacturing fell into contraction with a preliminary reading of 47.6%, down from the prior month’s 50.4%. Services fell further into contraction with a print of 46.1% versus the previous reading of 47.8%. Initial claims ticked higher, coming in at 240k, while continuing claims increased to 1551k from the prior reading of 1503k. New home sales surprised to the upside coming in at 632k versus the consensus estimate of 555k. Durable Goods orders were also better, coming in at 1% on the headline and up 0.5% ex-autos. The final reading of the University of Michigan’s Consumer Sentiment survey showed an increase in sentiment to 56.8 from the prior level of 54.7.

The S&P 500 gained 1.5%, the Dow rose 1.8%, the NASDAQ increased by 0.7%, and the Russell 2000 added 1.1%. The US Treasury curve flattened as longer-tenured Treasury yields fell more than the front end of the curve. The 2-year yield fell by two basis points to 4.48%, while the 10-year yield fell by thirteen basis points to 3.69%. Oil prices continued to struggle, with WTI falling 4.5% or $3.64 to $76.42 a barrel. Gold prices increased by $4.70 to $1755.5 an Oz.  Copper prices were little changed, closing at 3.615 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 11/18/2022

-Darren Leavitt, CFA

Investors continued to digest the market’s recent strength and questioned if there is more upside to the move. There was no lack of hawkish Fed speak throughout the week. St. Louis Fed President Bullard suggested the Fed may need to take the terminal rate to 7%. KC Fed President George suggested that the economy needed to contract and the labor market needed to weaken to get inflation in check. San Francisco Fed President indicated that the discussion to pause rate hikes was not even on the table for discussion. The combined rhetoric inverted the yield curve further, sending the 2-10 spread to sixty-eight basis points.

Earnings showed mixed results in the retailers. Walmart had a great quarter, while Target plummeted. Macy’s, Ross, Footlocker, and TJ Max reported better-than-expected results. In Technology, Palo Alto Networks and Cisco Systems had solid results, while Micron Technology missed estimates and lowered guidance. Q4 earnings expectations have increasingly become a concern as most expect economic growth to slow.

Economic data for the week was mixed but showed more signs that inflation may have peaked. The Producers Price Index came in at 0.2% versus expectations of 0.5% on a month-over-month basis, while it fell to 8% from 8.5% year over year. Similarly, the core PPI came in flat versus the consensus estimate of 0.3%. The core reading fell to 6.7% from 7.2% on a year-over-year basis. Retail sales came in better than expected at 1.3%, while the ex-autos reading came in better at 1.3%. Some of the strength in retail sales was attributed to Floridians replacing items after the most recent hurricane. Initial Jobless claims came in less than expected at 222k, while continuing claims ticked higher to 1517k.

The S&P 500 gave back 0.7%, the Dow was flat, the NASDAQ lost 1.6%, and the Russell 2000 fell 1.8%. The yield curve inverted further as the 2-year yield increased by nineteen basis points to 4.50%, and the 10-year yield fell one basis point to 3.82%. Commodity prices fell as concerns mounted on global economic growth. Oil prices fell 10% or $8.90 to close at $80.60 a barrel. Of note, OPEC + lowered their 2022 and 2023 oil demand estimate. Gold prices fell $18 to $1750.80 an Oz. Copper prices fell 7% or 0.29 to close at 3.636 a Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 11/11/2022

-Darren Leavitt, CFA

“Bar the door Katie” What an extraordinary week on Wall Street.  Tuesday’s Midterm elections, coupled with a Crypto stalwart blow-up, were accompanied by a better-than-expected Consumer Price Index report.  US Treasuries and growth stocks ripped higher while the US Dollar Index plunged.  Reports that China could relax its Zero Covid policy pushed Chinese equities higher while also putting a bid into the commodity complex.

The Mid-terms are still undecided, with a Georgia Senate race poised for a December 6^th runoff, and a few states are still counting ballots.  The markets generally seem to think we will come out of this election with gridlock in Washington, which in the past has been a good thing for markets.  No tax reform and no new fiscal measures provide investors with some clarity.  If, in fact, we do get gridlock and there are no new fiscal measures, this could allow the Federal Reserve to pursue its monetary policy tightening without conflict from the White House and Congress.  That said, if we go into recession and inflation is still elevated, this gridlock could hinder a fiscal response and prolong a recessionary period.

Volatility in the Crypto markets drew the attention of investors as FTX, a Cryptocurrency exchange, solvency was questioned.  Bitcoin sold off hard, which induced margin calls and what appeared to be forced selling.  The announcement that FTX had a white knight in Binance, another Cryptocurrency exchange, calmed the markets, but the calm was short-lived after Binance announced it was walking away from the deal after its due diligence.  In the end, FTX declared Bankruptcy, and the CEO stepped down.  There are still a number of questions about what went wrong, and there will certainly be ongoing investigations.  This, while a blow to Cryptocurrency markets in the near term, will most likely foster more regulation and help develop a framework for a more credible marketplace.

The anticipated October Consumer Price Index report was the major catalyst for the market’s action.  The lower-than-expected print on both the headline and core number induced a massive rally in the market as investors cheered the notion that we have most likely seen peak inflation.  The headline number came in at 0.4% versus the expectation of 0.6%. The core number that excludes food and energy came in a 0.3% versus 0.5%.  Both readings also improved on a year-over-year basis at 7.7% and 6.3%, respectively.  Goods inflation appears to be waning while services warrants continued attention.  Shelter, which constitutes just over 30% of the index, continued to show increased prices however, this part of the index is considered to have a significant lag, and investors seemed inclined to dismiss the increase given the lag and applaud the pullback in other components.  The softer print reduced the probability that the Federal Reserve would increase its policy rate by 75 basis points at their December 14^th meeting and increased the probability of a 50 basis point hike to 89.9%.  Additionally, markets lowered the expectations of the Feds Terminal rate to 4.75%-5% from 5%-5.25%.  US Treasuries screamed higher, with the 10-year yield falling below 4%.  In turn, the US dollar index came under significant pressure losing 4.1% on the week.  Of note, the Federal Reserve will get a look at November CPI on December 13^th. It will also get a read on the labor market with the November Employment Situation on December 4^th.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 11/4/2022

-Darren Leavitt, CFA

Wall Street incurred another week of losses as investors digested another 75 basis point rate hike from the Federal Reserve.  Hopes of a pivot away from a hawkish stance were diminished when Fed Chairman Powell conveyed that the Fed’s policy rate would likely be higher than previously expected and stay in place for longer.  However, the chairman acknowledged that the rate increase pace might be lower as the central bank assesses the effects on the economy of its previous rate hikes.  The odds of a 50 or 75 basis point hike at the Fed’s December meeting are about even.  Of note, the Bank of England increased its policy rate by 75 basis points, and ECB President Lagarde indicated the European block would also need to raise its policy rates to rein in inflation.  Emerging markets rallied on a Brazilian election won by Lula and on hopes that China would move away from its zero Covid policy.  Brazilian markets increased by 7.69% on the week, while large-cap Chinese issues advanced by 10.68%.

The S&P 500 lost 3.35%, the Dow fell 1.4%, the NASDAQ gave up 5.65%, and the Russell shed 2.54%. The US Treasury curve inverted further as the 2-year note yield increased by twenty-five basis points to 4.67%, and the 10-year yield increased by fifteen basis points to 4.16%.   Late in the week, a coordinated effort to intervene in the currency markets appeared in play.  The dollar, which had sat at highs, fell sharply on Friday against the Euro, Yen, Sterling, and Yuan.  Oil and copper prices surged on the notion of a “reopening” of China.  Oil prices increased by $4.75 or 5.4% to $92.64 a barrel. Copper prices rose 7.4%, closing at $3.69 a Lb.  Gold prices increased by 2$ or $33.4 to close at 1678.10 an Oz.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 10/28/2022

-Darren Leavitt, CFA

US financial markets followed through with another week of gains as investors gravitated toward the notion that the Fed would temper its monetary policy after the November meeting. Less-than-expected rate hikes from the Royal Bank of Australia and the Bank of Canada fostered the idea and pushed yields lower across the yield curve. The European Central Bank increased its policy rate by an expected 75 basis points and left its quantitative easing mechanisms in place.

3rd quarter earnings were mixed with mega-cap technology names disappointing while seemingly everything else managed to counterbalance those losses. Microsoft, Google, Meta, and Amazon all missed the mark, while Apple was able to counter some of Tech’s weakness in Friday’s session. Honeywell, Caterpillar, Exxon Mobile, and Chevron had solid quarters and promoted market leadership in the industrial and Energy sectors.

In the United Kingdom, Rishi Sunak became Prime Minister and vowed to reverse the fiscal policy mistakes made by former Prime Minister Liz Truss. In China, President Xi consolidated power and kicked off his third term. Xi has surrounded himself with loyalists and announced a wide range of measures to advance China’s interests globally. A continued Zero Covid stance with more lockdowns and the likelihood of more regulatory crackdowns on Chinese technology companies catalyzed a sell-off in Chinese ADRs.

Economic data showed an uptick in economic activity. The first look at 3rd quarter GDP showed a growth rate of 2.6%, above the consensus estimate of 2.1%. The GDP Price Deflator advanced by 4.1%, much lower than the prior reading of 9%. New Home Sales increased by 603k as 30-year mortgage rates topped 7%. Headline PCE and Core PCE were in line with estimates at 0.3% and 0.5%, respectively. October Consumer Confidence came in at 102.5, lower than the previous reading of 107.8. The final reading of the University of Michigan’s Consumer Sentiment came in lower, with a print of 59.5. Initial Jobless claims came in at 217k, while Continuing Claims ticked up to 1438k.

The S&P 500 gained 4%, the Dow advanced 5.7%, the NASDAQ added 2.2%, and the Russell 2000 led the way with a 6% increase. The yield curve flattened as the 2-year yield decreased by nine basis points to 4.42% while the 10-year bond yield fell by twenty basis points to 4.01%.

Oil prices increased by 3.5% or $2.98, with WTI closing at $87.89 a barrel. Gold prices fell by $14.10 to $1644.7 an Oz.  Copper prices fell by $0.04 to 3.43 an Lb. The US dollar was mixed, gaining against the Chinese yuan and the Japanese Yen and falling against the UK Pound and EU Euro.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 10/21/2022

-Darren Leavitt, CFA

Investors enjoyed a nice rally as Fed rhetoric suggested a less hawkish policy path. The rhetoric was backed by Nick Timiraos, a Fed pundit, who published an article in the Wall Street Journal that indicated the Fed would raise by 75 basis points at the November meeting and then raise by less in December. 3rd quarter earnings also helped sentiment. Robust reports from Goldman Sachs, Bank America, ASML, IBM, United Airlines, and Verizon induced a wave of buying.  However, stalwart Tesla disappointed the street with a lackluster earnings report.  In Europe, Prime Minster Liz Truss announced her resignation six weeks after taking office.  The news sent a bid into UK stocks and bonds, which further helped investor sentiment.  Morgan Stanley’s Investment Strategist, Mike Wilson, who has been bearish for most of the year, also bolstered sentiment after he told investors that the market could rally in the short term to 4175. Also of note was the Biden Administration’s decision to release another 15 million barrels of oil from the Strategic Petroleum Reserve and its announcement that the US would impose further technology export restrictions on China.

The S&P 500 gained 4.7%, the Dow rose 4.9%, the NASDAQ increased by 5.2%, and the Russell 2000 added 3.6%.  The US yield curve steepened as the 2-year note yield increased by one basis point to 4.51%, and the 10-year yield rose by twenty basis points to 4.21%.  The 2-10 spread was compressed to 30 basis points.  Oil prices decreased slightly, with WTI closing down $0.80 to $84.91 a barrel.  Gold prices increased by $9.70 to $1658.80 an Oz.  The US dollar continued to show strength and moved to a critical technical level of 150 against the Japanese Yen.  Higher yields in Japanese government bonds were met with the Bank of Japan’s intervention.

The economic calendar showed some resilience in the housing market.  Housing starts increased to 1439K versus the street’s estimate of 1425k.  Building permits also came in better than expected at 1564k.  Existing home sales cooled a bit, coming in at 4.71 million as weekly MBA Mortgage applications fell by 4.5%.  Initial jobless claims came in at 214k, while Continuing Claims increased to 1385k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 10/14/2022

-Darren Leavitt, CFA

Capital markets continued to be extremely volatile.  All eyes were on the US Consumer Price Index (CPI) print on Thursday, which showed no signs of inflation moderating.  The headline number increased by 0.4%, above the consensus estimate of 0.2%. The measure increased by 8.2% on a year-over-year basis, slightly lower than the 8.2% reading in August.  However, Core CPI, which excludes food and energy prices, increased by 0.6%, which was higher than the 0.5% expected increase.  The year-over-year figure hit a 40-year high coming in at 6.6% versus August’s print of 6.3%.

The data initially hammered the market, sending the S&P 500 to a new low for the year 3491 and to a level that marked a 50% retracement from the post-Covid highs.  The 50% retracement induced a technical buy signal and prompted algorithmic programs to kick in.  The bounce off of the lows was extended as shorts were forced to cover.  At the end of the day, the S&P 500 nearly had a 6% intraday range closing near the highs of the session.  However, the rally was short-lived as markets reversed on Friday and gave back most of the previous day’s gains.

The hotter-than-expected data solidifies the expectation that the Federal Reserve will increase its policy rate by 75 basis points on November 2nd and increases the probability that the Fed will raise by another 75 basis points in December.  More tightening from the Fed increases the likelihood of a recession, a concern voiced by JP Morgan CEO Jamie Diamond early in the week.

Across the pond, the new UK Prime Minister, Liz Truss, reversed course on some of her proposed fiscal measures and fired her Finance Minister.  At the same time, the Bank of England closed its emergency bond-buying program.  The combined actions ignited another sell-off in UK Gilts, providing investors another reason to go to the sidelines.

3rd quarter earnings kicked off in earnest this week, with many of the Financials reporting better-than-expected results.  JP Morgan, Wells Fargo, Citi Bank, and US Bank Corp came in with better results and helped the financial sector post a gain for the week.  Other notable positive results came from United Health Care and Pepsi. It is also worth mentioning that Kroger will be buying Albertsons in a $24.6 billion merger.

The S&P 500 lost 1.6%, the Dow gained 1.2%, the NASDAQ fell 3.1%, and the Russell 2000 gave up 1.2%. The US Treasury curve inverted more on the hotter-than-anticipated inflation data.  The 2-year yield increased by twenty basis points to 4.5%, while the 10-year bond yield increased by thirteen basis points to 4.01%.   Oil prices gave up some of last week’s monster rally.  WTI prices fell by 7.3% or $6.47 to $85.71 a barrel.  Gold prices decreased by 3.5% or $58.3 to $1649.10 an Oz. Copper prices increased by $.02 to $3.41 an Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involve risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 9/30/2022

-Darren Leavitt, CFA

Global financial markets ended a difficult month of September with losses. Worries of a systemic breakdown in financial markets were induced by the extreme sell-offs in British Gilts and the British Pound. The Bank of England responded by injecting liquidity via a bond purchasing program.  Despite the move, investors continued to go to the sidelines.

Inflation data out of the Eurozone continued to be hot, and US Core PCE prices disappointed with a higher year-over-year print. Federal Reserve Presidents continued with their hawkish rhetoric, which further stoked fears that central banks are sending the global economy into recession.

A downgrade of Apple by Bank of America moved the stock materially lower and led investors to question the market’s leadership. Earnings out of Nike did not help matters. The company cited a considerable increase in inventories and guided the street to lower margins in the coming quarters.

Geopolitical tensions increased after Russia annexed four regions of Ukraine. Putin also indicated he would use his full array of weapons if needed to secure Russia’s territory. On another front, the Nord 1 Pipeline that supplies Europe with Russian gas was closed due to several leaks caused by sabotage.

The S&P 500 and Dow closed lower by 2.9%. The S&P 500 closed at a new low for the year at 3586.47 after breaking the June low of 3660. The NASDAQ lost 2.7%, and the Russell 2000 shed 0.7%.

The US Treasury curve steepened this week as longer-tenured issues sold off. The 2-year note yield was unchanged for the week at 4.20%. The 10-year yield increased by ten basis points to 3.79%. Oil prices increased by 1% or $0.84 to $79.53. Gold prices increased by $15.40 to $1671.30 an Oz.  Copper prices were up by $0.05 to 3.40 a Lb.

Economic data showed increased inflation in Europe and the US. Eurozone CPI increased by 10% YoY in September compared to 9.1% in August. In the US, August PCE increased by 6.2% versus July’s 6.4%; however, Core PCE increased by 4.9% in August versus 4.7% in July. Personal Income increased by 0.3%, in line with estimates. Personal Spending increased by 0.4%, which was higher than the consensus estimate of 0.2%. Initial jobless claims fell to the lowest level since May at 193k, and Continuing Claims fell to 1347K. Both readings showed a resilient labor market. The third estimate of second-quarter GDP showed a contraction of 0.6%.   Consumer Confidence came in better than expected at 108, but the University of Michigan’s final reading for September showed a decline to 58.6% from 59.5.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 9/23/2022

-Darren Leavitt, CFA

It was another brutal week on Wall Street as global economic growth concerns aggravated sentiment. Investors sold risk assets in the wake of several rate hikes by global central banks. The Federal Reserve raised its policy rate by 75 basis points to 3%-3.25%. The decision to raise rates was as expected; however, the Fed’s median projected terminal rate for 2023 increased to 4.6% and showed that rates were not only expected to be higher but higher for longer. The Fed Chairman’s post-statement Q&A echoed his comments from the Economic Symposium at Jackson Hole where he reiterated the Fed would get inflation back to 2% even at the cost of sending the economy into recession.

The Bank of England raised its policy rate by 50 basis points while the new Prime Minster announced a rollback in taxes and increased fiscal spending. The conflicting measures sent the British Pound to 1.0862, a 37-year low to the US dollar. The Bank of Japan decided to keep its policy rate unchanged at -0.1%. However, the BOJ did intervene in the currency market for the first time since 1998 to defend against a weaker Yen. The Swiss National Bank increased its policy rate for the first time since 2015 by 75 basis points.

The S&P 500 lost 4.6% while breaching some key technical levels of support. The index fell below the psychological level of 3900 early in the week and subsequently broke below 3838 before testing the June closing low print of 3666.71. Goldman Sachs took their year-end target for the S&P 500 to 3600 and said the index could fall to 3150 in 2023 if a hard landing scenario plays out for the US economy. The Dow gave back 4%, the NASDAQ declined 5.1%, and the Russell 2000 shed 6.8%. International developed markets fell 6.04%, while Emerging Markets sank 4.82%.

The Treasury market wasted no time repricing the Fed’s new projected rate path. The front end of the curve took the brunt of the sell-off; however, the entire curve shifted higher. The 2-year note yield jumped thirty-six basis points to 4.21%. The 10-year yield increased by twenty-five basis points to 3.7%, while the 30-year Bond yield increased by nine basis points to 3.61%.

The commodity complex also had a rough week. The notion of a slowing global economy hit the oil markets particularly hard. WTI prices sank 7.8% or $6.71 to close at $78.69 per barrel. Similarly, Copper prices lost 5% or $0.18, closing at $3.35 an Lb. Gold prices fell 1.6% to close at $1655.90 an Oz.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 9/16/2022

-Darren Leavitt, CFA

There was no place for investors to hide this week except in cash. A hotter than anticipated Consumer Price Index (CPI) caught most of Wall Street off guard and propelled the S&P 500 to its largest one-day sell-off since March 2020. The report showed August consumer prices increasing by .0.1% versus the street’s expectation of a decline of 0.1%. The Core reading that excludes food and energy showed an increase of 0.6%, much higher than the anticipated 0.3%. The Core number increased 6.3% on a year-over-year basis versus 5.9% in the prior month. The energy component of the reading fell by 10.6% month over month, but the Food and Shelter components continued to show significant increases. Interest rates moved significantly higher on the back of the print as the market priced in a 100% probability that the Federal Reserve will raise its policy rate by 75 basis points in the coming week.

Any hope that the Fed had a chance to pivot and that we had seen peak inflation was dashed after the more robust CPI print and bolstered the notion that rates would be higher for longer. To add fuel to the fire, Fed Ex preannounced Thursday after the close, reducing their quarterly earnings and withdrawing guidance for 2023. The news catalyzed another leg of selling on further concerns for the global economy.

The S&P 500 lost 4.8% and fell below 3900, a critical level of support. The Dow fell 4.1%, the NASDAQ plunged 5.5%, and the Russell 2000 sold off by 4.5%. Developed international markets lost 3.27%, while emerging markets lost 3.1%. The yield curve became more inverted as shorter tenured yields increased by more than the long end of the curve. The 2-year note yield increased by twenty-eight basis points and closed at 3.85%. The 10-year bond yield rose by thirteen basis points to 3.45%.   Oil prices fell 1.5% or $1.35 to $85.4 a barrel. Gold prices fell 2.5% or $42.4 to close at $1683.70 an Oz. The dollar hit 37-year highs against the British pound and was slightly higher against the other majors.

The economic calendar also featured the Producer Price index, which was slightly cooler than expected. Headline PPI increased 8.7% year-over-year in August, down from 9.8% in July. Similarly, Core PPI rose 7.3% year-over-year in August compared to 7.7% in July. Retail Sales in August increased by 0.3%, which was better than the consensus estimate of 0.0%. The Labor market continued to show strength. Initial claims came in at 213k, lower than the expected 230k. Continuing claims came in slightly higher than the week before at 1403k. A preliminary reading of Consumer sentiment came in at 59.5, which was lower than expected but higher than the prior reading of 58.2.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 9/9/2022

-Darren Leavitt, CFA

The holiday-shortened week felt like anything of the sort.  Wall Street is back from summer break, and market action kicked right into high gear.  After three straight weeks of losses that saw the S&P 500 fall nearly 10% from its August 16th highs, the market rallied nicely on what appeared to be primarily negative news and hawkish central bank rhetoric.  The week also saw the death of Queen Elizabeth II and marked an end to the reign of a monarch who led with dignity and influence across the political spectrum.  The United Kingdom will mourn and celebrate the Queen’s life over the next few weeks.

Global central banks continued to tighten monetary policy.  This week, the Royal Bank of Australia, the European Central Bank, and the Bank of Canada increased rates.  The Bank of England announced it would postpone its policy meeting for two weeks as the country mourns.  However, it is widely expected that the BOE will increase its policy rate by 50 basis points. Notably, the new UK Prime Minster, Liz Truss, introduced a proposal this week that would cap energy bills for households and small businesses for the coming year at a potential cost of 170 billion Pounds. The move to increase fiscal stimulus while at the same time tightening monetary policy seems at odds and will likely warrant more debate.  More hawkish rhetoric from Fed Chairman J Powell and multiple Fed Presidents did little to hinder the market’s advance.  The Fed is expected to raise the Fed Funds rate by 75 basis points to 3.35%-3.5% on September 21st.

The S&P 500 rallied 3.6% for the week on what appears to be short-term oversold conditions and extreme levels of bearish sentiment.  Of note, the S&P 500 was able to regain its 50-day moving average after testing and holding the 3900 level. The Dow gained 2.7%, the NASDAQ bounced 4.1%, and the Russell 2000 increased by 4%.

The US Treasury market seemed to notice the hawkish tone of central bankers, which induced sales across the curve. The 2-year note yield increased by seventeen basis points to 3.57%, while the 10-year bond yield increased by twelve basis points to 3.32%.

Action in the commodity markets continued to be influenced by Russia.  Oil prices fell early in the week as the EU could not establish price caps on Russian oil.  At the same time, Russia announced that its Nord Stream 1 pipeline would be closed indefinitely.  Putin was quoted saying, “Let Europe freeze.”  WTI prices ended the week little changed, losing $0.16 to close at $86.75 a barrel. Gold prices increased by $0.90 to 1726.10 an Oz.  The dollar continued its strength but fell hard on Friday, perhaps due to being technically overbought.  The greenback established 24-year highs against the Yen, 37-year highs against the British Pound, and 20-year highs against the Euro.

Next week will bring a loaded economic calendar, including August CPI, PPI, Retail Sales, and Import/Export prices.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 9/2/2022

-Darren Leavitt, CFA

Global financial markets continued to sell off on hawkish rhetoric from the Federal Reserve and on the realization that rates will likely be higher and in place for a longer time horizon. Cleveland Fed President Loretta Mester reinforced the notion by suggesting the terminal rate could be higher than 4% at the beginning of 2023 and indicated she thought the idea of a rate cut in 2023 was unlikely. Elevated readings in the Eurozone’s Producer Price Index, up 37.9% year-over-year, and Consumer Price Index, up 9.1% year-over-year, increased the likelihood that the ECB would raise its policy rate next week by 75 basis points. Economic growth concerns were stoked further by the announcement of Covid lockdowns in China’s Hebei, Chengdu, and Shenzhen provinces. Relations between the US and China continue to be complicated.

NVidia shares sold off significantly after the company announced that millions of dollars of revenue would be subject to the US government imposing new license requirements for selling its A100 and A400 chips to China and Russia. The Philadelphia Semiconductor Index fell 7.1% for the week. Late in the week, the Biden administration announced that Trump-era tariffs would likely remain in place. China also warned of consequences if Arizona Governor Ducey were to visit Taiwan.

The S&P 500 lost 3.3% and fell below its 50-day moving average. The Dow gave back 3%, the NASDAQ fell 4.2%, and the Russell 2000 shed 4.7%. Growth stocks took the brunt of the selloff, but value issues were not immune to the weak tape. The Materials and Information Technology sectors were the hardest hit, losing 5%.

The US Treasury market continued to have wild fluctuations in rates. The curve steepened over the week, with the 2-year note yield falling one basis point to 3.4%, while the 10-year bond yield increased sixteen basis points to close the week at 3.2%.

The commodity complex was also quite volatile. WTI fell 6.4% on the week to close at $86.91 a barrel. News that the Eurozone was well ahead of stockpiling natural gas hit markets. A G-7 meeting that put a price cap on Russian oil was met with the announcement that Gazprom’s Nord Stream 1 pipeline would continue to be closed for technical issues related to an oil leak- the news was cited as the reason the markets sold off on Friday. The slower economic growth narrative hit copper, too; it fell 7.9% on the week to $3.41 an Lb.

The US dollar remained in vogue and had significant gains against the major crosses. The Japanese Yen fell to a 24-year low against the greenback breaching the 140 level. Of note, Bitcoin traded below $20k to $19,809.

The August Employment Situation Report highlighted economic data for the week. The report was weaker than July’s but showed no signs of an economic recession in the labor market. Non-Farm Payrolls increased by 315k versus the expectations of 300k. Private Payrolls increased by 308K, higher than the consensus estimate of 280k. The Unemployment rate ticked higher to 3.7% from the prior reading of 3.5%. Average hourly earnings increased by 0.3% versus expectations of 0.5%. Earnings have increased 5.2% on a year-over-year basis. The Average work week decreased to 34.5 hours from 34.6 hours. The Labor Participation rate increased to 62.4% from 62.1%. High-frequency employment data also showed a healthy labor market. Initial claims came in at 232k, and Continuing Claims were 1438k. ISM Manufacturing for August was unchanged from July at 52.8%. We get ISM Non-Manufacturing early next week. The Conference Board’s Consumer Confidence Index increased nicely in August with a reading of 103.2; the last reading was 92.4%. Weekly Mortgage Applications showed a decline of 3.7%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 8/26/2022

-Darren Leavitt, CFA

Global financial markets were focused for most of the week on economic rhetoric from the annual Jackson Hole Economic Symposium hosted by the Kansas City Federal Reserve.  Throughout the second half of the week, investors evaluated various Fed Presidents’ statements regarding the direction of US monetary policy.  Federal Reserve Chairman Jerome Powell gave a short but to-the-point speech on Friday that dimmed the notion of a Fed pivot.  The Chairman suggested that the Fed Funds Rate would be higher and elevated for longer and acknowledged that this would likely cause pain for US households and businesses.  The equity markets sold off hard on the news while US Treasury trade was subdued.

The S&P 500 lost 4%, the Dow fell 4.2%, the NASDAQ tumbled 4.4%, and the Russell 2000 gave up 2.9%.  The yield curve inverted this week, with much of the selling on the front end of the curve coming before Friday.  The 2-year note yield increased fifteen basis points to 3.4%, while the 10-year bond yield increased five basis points to 3.04%.  Oil prices increased 2.5% or $2.32 to $93.14 a barrel.  Gold prices fell by $12.80 to 1750.2 an Oz.  Copper prices increased by $0.03 to $3.66 an Lb. The US dollar was stronger across the major crosses as the Euro fell below parity.

The PCE, the Fed’s preferred measure of inflation, showed a decrease of 0.1% on a month-over-month basis and was up 6.3% year-over-year versus the increase of 6.8% in June.  Core PCE, which excludes food and energy, was up 0.1% versus the estimated 0.3%.  The reading fell to 4.6% from 4.8% on a year-over-year basis.  High-frequency employment data continued to show a strong labor market.  Initial Jobless Claims came in at 243k versus the estimate of 257k.  Continuing claims fell to 1415k from the prior week’s reading of 1434k.  New Home Sales showed continued weakness in the housing sector.  Sales fell to 511k from the preceding month’s level of 590k.  Weekly MBA Mortgage applications fell by 1.2%.  The 2nd estimate of Q2 GDP came in at -0.6%, while the GDP Deflator increased to 8.9%.  The final reading of the University of Michigan’s Consumer Sentiment Index rose to 58.2% from the prior month’s reading of 51.5% on a deceleration of inflation especially noticed at the gasoline pump.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 8/19/2022

-Darren Leavitt, CFA

US equities and bonds ended the week lower in an erratic fashion. Technically, the S&P 500 failed to surpass it’s 200- day moving average, which gave reason for investors to take profits. The S&P 500 had gained nearly 19% over the last two months and seemed overbought and ready for a pullback. Meme stocks bore the brunt of the sell-off with Bed Bath and Beyond, showing how millions can be made and lost in nonsensible trading. Growth names sold off as the US yield curve steepened. Fed rhetoric throughout the week remained hawkish, with some Fed Presidents calling for a 75 basis point hike. At the same time, another President conceded that the Fed would need to put the economy into a recession to curb inflation.

Q2 earnings continued to be a mixed bag. Walmart surprised the street with better than expected results, while Target and Kohl’s results were disappointing. Cautious commentary on the next few quarters from ADI and AMAT, semiconductor equipment companies, also hindered market sentiment. Global economic data showed weakening retail sales and industrial production in China and record levels of inflation in the UK and Germany. US economic data showed benign retail sales and evidence that the housing market is cooling off.

The S&P 500 lost 1.2%, the Dow fell by 0.2%, the NASDAQ gave up 2.6%, and the Russell 2000 shed 2.9%. The US yield curve steepened but remains inverted. The 2-year note yield was unchanged on the week closing at 3.25%. The 10-year bond yield increased by fourteen basis points to 2.99%. Oil prices fell 1.6% or $1.52 to $90.82 a barrel. Gold prices fell 2.8% or $52.30, closing at $1762 an Oz.  Copper prices were unchanged for the week at 3.66 an Lb. Bitcoin fell over 13% on the week to $21,256 as risk assets lost favor. The dollar strengthened meaningfully against the British Pound, the Euro, and the Japanese Yen.

In the US, retail sales for July were unchanged from June. Retail sales Ex-autos came in better than expected at up 0.4%. Housing starts fell to 1446K versus the street expectation of 1550k. Building permits were better than expected at 1674k. Existing Home Sales fell to 4.81 million versus an estimate of 4.91 million. Mortgage applications fell by 2.3% from last week. The National Association of Home Builders market index declined to 49; a reading of less than 50 indicates negative sentiment. Of note, the index has now fallen for the last eight months. Initial claims came in a touch better than expected at 250K, and Continuing Claims increased slightly to 1437K.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 8/12/2022

-Darren Leavitt, CFA

Weaker than anticipated inflation data released in the second half of the week bolstered the peak inflation narrative and catalyzed the S&P 500 to the fourth week of gains. Of note, on a technical basis, the S&P 500 has now exceeded a retracement of 50% of its losses from its June 16th low of 3,666.77.  BTIG Technical analyst Jonathan Krinsky noted that since 1950 a retracement greater than 50% off the lows has never gone on to make new cycle lows- so perhaps we’ve seen the worst of this bear market.  The rally has induced momentum strategies back into the market, and there appears to be a real sense that there is a fear of missing out trade going on too. Earnings continue to come in mixed. Notably, NVidia and Micron disappointed with their guidance, while investors cheered solid results out of Disney. In Washington, the House approved the Inflation Reduction Act and is awaiting President Biden’s signature.

The S&P 500 gained 3.3%, the Dow added 2.9%, the NASDAQ climbed 3.1%, and the Russell 2000 led with an advance of 5%.  The yield curve ended the week pretty much where it started.  The 2-year note yield increased by two basis points to 3.25%, while the 10-year increased by one basis point to 2.85%.  Oil prices surged on the week and reclaimed the key technical level of $92. Reports from the IEA and OPEC+ suggested oil demand would fall over the next year but also pointed out that we remain in a supply deficit.  WTI prices increased by $3.61 and closed at $92.34 a barrel.  Gold prices increased by 1.4% or $25 to $1815.30 an Oz.  Copper prices increased by $0.11 to $3.66 an Lb.  The US dollar was generally weaker against the other major currencies.

The July headline number for the Consumer Price Index (CPI) came in flat versus expectations of a 0.3% increase. The reading is up 8.5% year-over-year, down from June’s 9.1% print. The Core reading, which excludes food and energy, came in at 0.3% versus the consensus estimate of 0.6% and is up 5.9% year-over-year, in line with June’s reading. The food index was up 1.1% monthly and 10.9% over the last year. The energy index was down 4.6% month-over-month but still up 32.9% from last year. The Shelter index increased by 0.5% in July and is up 5.2% year-over-year. The Producer Price Index (PPI) also showed decreases in prices. The headline number came in at -0.5% versus the estimated 0.3%. Core PPI was up 0.2%, lower than the expected 0.4%. Import and Export prices declined as well. On the employment front, we saw Initial Claims of 262K and Continuing claims tick up to 1428k from 1420k. A preliminary reading of the University of Michigan’s Consumer Sentiment index showed a tick higher in sentiment to 55.1% from July’s final reading of 51.5%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 8/5/2022

-Darren Leavitt, CFA

Despite a cautious start to the week, US equity markets posted gains for the third week. A tepid ISM manufacturing report coupled with uncertainties surrounding House Speaker Pelosi’s visit to Taiwan initially keep investors sidelined. A benign reaction by China to Pelosi’s visit, along with another week of better than expected earnings, coaxed investors off the sidelines and into buy mode. However, an extremely strong Employment Situation Report stalled the week’s rally on Friday as investors backed off the notion that the Federal Reserve would pivot away from its hawkish monetary policy.

The S&P 500 gained 0.4%, the Dow fell 0.1%, the NASDAQ added 2.2%, and the Russell 2000 rose by 1.9%. 87% of S&P 500 companies have reported second-quarter earnings. 75% of those companies have beat earnings expectations by an average of 3.4%, while 70% have beat top-line estimates by an average of 3.5%. Energy and Healthcare companies have reported the best results for the quarter.

US Treasuries got hammered on the stronger employment data. The 2-10 spread inverted to thirty-nine basis points, suggesting the economy could be headed into a recession. The 2-year yield increased by thirty-three basis points to 3.23%, while the 10-year yield increased by twenty basis points to 2.84%.

Concerns regarding global economic growth hit oil prices. WTI fell 10%, closing at $88.73 a barrel. A technical break below $92 a barrel, along with OPEC+’s announcement that they would increase production by 100,000 barrels a day, provided more reason to sell crude. Gold prices increased by $7.30 to 1790.30 an OZ. Copper prices increased fractionally, closing at $3.57 an Lb.

Economic news was highlighted by the Employment Situation Report. Non-Farm Payrolls increased by 528k, much more than the forecast of 250k. Similarly, Private Payrolls increased by 471k versus the estimate of 200k. The Unemployment rate fell to 3.5% from 3.6%. Average hourly earnings ticked up 0.5% on a month-over-month basis; the street was looking for an increase of 0.3%. On a year-over-year basis, wages have increased by 5.2%. Initial claims for the week were in line with estimates at 260K, while Continuing Claims ticked up to 1416k from the prior week’s reading of 1368k. ISM Manufacturing came in at 52.8%, down from June’s 53%. ISM Services was better at 56.7%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 7/29/2022

-Darren Leavitt, CFA

Investors faced the busiest week of the year as 175 companies representing 50% of the S&P 500’s market capitalization reported 2nd quarter earnings. The results were mixed and produced drastic swings in share prices. Microsoft and Alphabet reported “better than feared” results, while Amazon and Apple provided better than expected results. Chevron and Exxon both crushed their earnings estimates. On the other hand, Meta, Walmart, Shopify, Roku, and Intel were disappointments. Growth issues outperformed over value, and the Mega-caps outperformed their counterparts.

Investors were also faced with the July Federal Open Market Committee’s decision on monetary policy and the subsequent statement from Fed Chairman Jerome Powell. The Committee unanimously decided to increase the policy rate by 75 basis points to a range of 2.25% to 2.50%. The market rallied on the Fed Chairs’ comments that it may be appropriate to wait and see how inflation has been impacted by the front loading of the Fed Funds rate. The Chairman also suggested that the Fed would be data-dependent and willing to go another 75 basis points in the September meeting. However, it will not telegraph its policy to the markets as it has over the last several years. The results will increase the importance of data analysis by the street and likely cause more volatility around key economic reports. Unfortunately, the Fed continues to be in a rock and hard spot as they try to thwart inflation by tightening financial conditions while, at the same time, the markets are loosening financial conditions.

Economic data for the week was highlighted by the advanced reading of 2nd quarter GDP, which showed a contraction of 0.9%. The street had been looking for growth of 0.5%. The final reading of Q1 GDP showed a contraction of 1.6%. If the Q2 readings continue to show contraction, there is an argument that we are technically in recession. The debate of whether or not we are in a recession will take on many forms, but the most prominent rebuttal to the notion that we are currently in a recession is based on a continued strong employment market. Initial claims for the week came in at 256k versus the street’s estimate of 253K. Continuing claims fell by 25k to 1.359M. Inflation data included the Federal Reserve preferred measure of PCE, which came in at 0.6%, in line with estimates but up 6.8%, the highest level since 1982. Core PCE was also in line with expectations at 0.5%. The Employment Cost Index ticked higher to 1.3% versus the consensus estimate of 1.1%. Personal Income increased by 0.6%, slightly higher than the 0.5% consensus. Personal spending increased by 1.1%, which was also higher than estimated. The final reading of the University of Michigan’s Consumer Sentiment plummeted to 51.5%, the 2nd lowest reading ever.

The S&P 500 gained 4.3%, the Dow rose 3%, the NASDAQ increased by 4.7%, and the Russell 2000 added 4.3%. The US Treasury curve inverted further, with the 2-year note yield falling nine basis points to 2.90%. The 10-year yield fell fourteen basis points to 2.64%. As mentioned before, the lower rates across the curve loosen financial conditions. Oil prices traded fractionally higher. WTI increased by $0.61, closing at $98.55 a barrel. Gold prices increased by 4.7% or $80.2 to $1783 an Oz.  Copper prices soared by 10.5% to close at $3.57 an Lb. The US dollar weakened against the majors and lost significantly against the Japanese Yen.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 7/22/2022

-Darren Leavitt, CFA

US financial markets rallied over the week despite increasing economic growth concerns. A very weak BofA Fund Manager Survey validated a sense that some, if not most, of the coming economic weakness has been priced into the market. The survey showed high cash levels, low equity exposure, and high expectations for recession. The negative sentiment provided contrarians a reason to step in and buy the market. US economic data was weaker than expected and highlighted by a weakening housing market, increasing initial claims, and a service contraction. Q2 earnings continued to roll in. Tesla and Netflix provided an upside catalyst for growth stocks, while Snap Chat’s dismal quarter hammered the social media issues. Travel-related names fell on airline earnings and an equity raise by Carnival Cruise. CSX and Union Pacific helped the industrials move higher on better-than-expected earnings. However, Verizon and AT&T missed their marks.

Lockdown measures in China aimed at curbing Covid infections continued to dampen supply chain sentiment. In Europe, the ECB raised its policy rate for the first time in eleven years by a higher than anticipated 50 basis points. The rate hike came as Italian Prime Minister Mario Draghi failed to form a coalition government and announced his resignation. Interestingly, the ECB will continue its QE program, perhaps to keep peripheral sovereign spreads in check.

The S&P 500 gained 2.5%, the Dow rose 2%, the NASDAQ added 3.3%, and the Russell 2000 tacked on 3.6%. The volatility continued in the rates market as the 2-year note yield fell by fourteen basis points to 2.99%. The 10-year bond yield lost fifteen basis points closing at 2.78%. The curve’s inversion also portends economic weakness being priced into the market. Oil prices fell for another week. WTI prices fell by $3.18 or 3.2% to $94.76 a barrel. Of note, the Nord 2 pipeline, which had closed for service, reopened at 40% capacity, which surprised many energy traders. Gold prices climbed $16.50, closing at $1719.30 an Oz.  Copper prices increased by 2.7% or $0.09 to $3.32 am Lb. This week, the dollar weakened against the majors as the Euro found some footing off the ECB’s rate hike decision.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary – 7/15/2022

-Darren Leavitt, CFA

It was an extremely busy week on Wall Street with a full calendar of economic data and the start of 2nd quarter earnings. Growth concerns fostered more selling in equities and commodities while the long tenures of the yield curve rallied. US dollar strength continued as the Euro broke parity with the Dollar on rate differentials and concerns related to a breakdown of Italy’s parliament. Prime Minster Draghi penned his letter of resignation after losing support from his major coalition party, but the Italian President dismissed the resignation. US President Joe Biden was in the Middle East, where there were hopes that meetings with the Saudis would yield an announcement of increases in oil production, but no announcement was made.

The S&P 500 fell 0.9%, the Dow shed 0.2%, the NASDAQ lost 1.6%, and the Russell 2000 gave up 1.4%. The US Treasury curve inverted significantly over the week as the 2-year note yield increased by one basis point to 3.13%. The 10- year yield fell by seventeen basis points to close at 2.93%. The inversion suggests that Fed will continue on its path of rate hikes at the expense of economic growth in the future. This notion of slower economic growth has impacted commodities as well. Over the last month, we have seen oil and industrial metals sell-off. Oil prices fell 7.2% or $7.66 to close at $97.94 a barrel but had traded as low as $92 and change. Copper prices fell 8% on the week closing at $3.22 an Lb. Gold prices fell by $39.8 or 2.2% to $1702.8 an Oz. Dollar strength has impacted commodities as well. Generally speaking, a strong dollar weakens commodities. The Euro/Dollar cross broke parity this week while the Japanese Yen fell to 138.56 against the Dollar.

Economic data was highlighted by a stronger than expected June CPI print. The headline number came in at 1.3% versus the street’s expectation of 0.9%. On a year-over-year basis, prices were up 9.1%, the highest reading since 1982. Core CPI that excludes food and energy was up 0.7% in June, which was also higher than expected. Energy prices increased 41.6% year-over-year, while food prices increased by 9.1%. The shelter index was up 5.6%, and Used Car prices were up 7.1% from a year ago. The June Producers Price Index (PPI) was also hotter than expected at 1.1% the street was looking for 0.8%. The reading is up 11.3% year-over-year. The two inflation readings prompted an increased probability of a 1% rate hike by the Federal Reserve in a couple of weeks. Retail sales in June were better, coming in at 1% versus 0.8%. The Preliminary July reading of the University of Michigan’s Consumer sentiment saw a surprise uptick to 51.1% on lowered inflation expectations.

2nd quarter earnings kicked off with disappointment from financial stalwarts JP Morgan and Morgan Stanley. The CEO of JP Morgan reiterated his concerns for the economy and the uncertain environment. The earnings results and commentary put pressure on the financials. On Friday, Citigroup announced an excellent quarter, and Wells Fargo indicated that their Net Interest Margin would increase by 20% over 2021. The news helped markets rebound on Friday. Additionally, United Healthcare beat on the top and bottom lines and provided better than expected guidance for the coming quarter and full year.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.