Published Friday, November 18, 2022 at: 8:10 PM EST
The bear market entered its sixth month and conflicting signals of strength and weakness in the economy stood out this past week.
Friday morning’s release of the U.S. Index of Leading Economic Indicators marked this key economic indicator’s eighth straight monthly decline, and Thursday’s housing starts release marked its ninth consecutive monthly decline. These are ominous signs.
However, retail sales, excluding gasoline because its price is so volatile it distorts the picture, shot up +7.9% in the 12 months through the end of October. In October alone, retail sales surged 1.3%, a clear sign of strength. Additional strength was signaled in Thursday’s GDPNow estimate for real GDP growth in the fourth quarter of 2022 of +4.2% -- much higher than the consensus of leading economists.
The +4.2% seasonally adjusted annual growth rate estimate is a running estimate of what’s happening now in the economy based on an algorithm devised by the Federal Reserve Bank of Atlanta. The model is designed to grow more accurate as more data is released each quarter and its estimates have been wildly inaccurate many times in recent years. However, in recent months, the GDPNow growth forecast has been more accurate than the forecasts from leading economists.
The S&P 500 stock index closed Friday at 3,965.34 gaining +0.48% from Thursday, and down -0.69% from a week ago. The index is up +77.22% from the March 23, 2020 bear market low and -17.32% lower than its January 3rd all-time high.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.
This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.
Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.
© 2023 McCarthy Asset Management, Inc. All rights reserved.