Last week was not kind to stock market participants, as the S&P 500 tumbled 3.0% and the Dow fell to its lowest level since September 2006. Record high crude prices, tumbling financials and less-than-stellar outlooks from tech companies took a toll on market sentiment. (more…)
To say the least, June of 2008 will not be a month we remember fondly with respect to the equity markets. With oil prices reaching new highs frequently throughout the month, equities have found new lows for the year. While the equity market weakness in late 2007 and early 2008 was focused primarily on the financial sector’s troubles, this month’s decline has been almost solely a function of inflation concerns. There is much concern about the Federal Reserve’s ability to effectively manage the delicate balance between a very soft economy and keeping a lid on inflation. The interesting thing about that relationship is that the former may be the best solution for the latter, and that may be what the Fed is looking for. When the Fed’s Open Market Committee met last week, they left rates unchanged. They slightly reduced their risk assessment for economic growth while modestly increasing inflation risks. Our expectations for future Fed Funds rate moves are for higher rates but not until the fourth quarter.