Market Update - June 20, 2021
Hope all is well. Happy Father’s Day! After three consecutive weeks of posting small gains, the S&P 500 reversed course, falling nearly 2%. The Dow fared worse, dropping more than 3%—the biggest weekly decline for that index in nearly eight months—while the NASDAQ fell less than 1%. In honor of Father’s Day, I have broken down this week’s news using corny dad jokes.
What kind of drink can be bitter and sweet? ... Reali-tea.
The U.S. Federal Reserve is waking up to the reality that inflation is not going away. On Wednesday, the Fed issued a revised outlook which rippled across the markets, weighing on stocks and many other assets. Policy makers signaled that they expect to raise interest rates by late 2023 (sooner than the Fed had previously projected) and members also boosted their inflation forecast. Despite a slight acceleration in timeline, rate hikes are still likely two years away.
Which bear is the most condescending? ... A pan-duh.
China blasted the U.S. and EU as 'condescending'. China said Tuesday it firmly rejects U.S.-EU joint statement after President Biden and European leaders rebuked Beijing for the third time in as many days.
Two guys walked into a bar ...The third guy ducked.
Learning from the mistakes of others helps when investing for the long term. This week’s drop might have you nervous. Realize, it’s been eight months since we had a 5% pullback, dips of that magnitude historically happen about 3 times per year. Comparisons have been drawn to the market dip in 2013 (the "Taper Tantrum"). You may view this as a reason to move to the sidelines with your stock investments, don’t. The drop in 2013 was not prolonged or severe. The "Taper Tantrum" produced a 5.8% pullback that lasted 23 days. The outlook for stocks is still positive, as the global economy continues to reopen amid a growing vaccination effort and ongoing fiscal stimulus in several parts of the world. If we do experience a similar drop now it would be a buying opportunity, and time to reallocate more into the stock market. It is not a reason to sell your stocks.
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