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Gradient Investments Weekly Talking Points 05/13/2022
All data is for the week ended May 13, 2022.
Stocks
The equities markets were again marked by increased volatility and sharp declines last week. The benchmark S&P 500 was down 2.35% while the Russell 2000 dropped 2.50% and the Nasdaq declined 2.77%. Overseas, the developed markets index (MSCI EAFE) lost 1.37% while the emerging markets (MSCI EM) dropped 2.60%. Staples and communication services were the best performing sectors while real estate and technology were the largest laggards. Value outperformed growth stocks once again.1
Fixed Income
Bond values rose as interest rates dropped across the range of maturities. The 10-year treasury benchmark yield declined 19 basis points to 2.93% after having reached a recent peak of 3.12% a week earlier. 2
Commodities
Bitcoin (BTC-USD) fell 18.75% as some other crypto currencies suffered even greater declines and the value of one (Luna, ticker LUNA1-USD) dropped to a fraction of a penny. Bitcoin is now down 36.76% year to date3 as the crypto currencies have been quite volatile and have not provided significant protection against rising interest rates.
Economic Data
Inflation rose 8.3% on a year-over-year basis last month, above the consensus estimate of 8.1% but a slight deceleration from the month of March. Core inflation (stripping out volatile items such as food and energy) also decelerated on a year-over-year basis, to 6.2%, but increased on a month-over-month basis boosted by an 18.6% increase in airline fares.4
Company News3
LCI Industries (LCII), a G33 holding, reported revenues and earnings that exceeded estimates, driving the share price up 10.42% for the week. The maker of components for the recreational vehicle (RV) and trucking markets also noted extremely strong sales growth in April due to elevated RV and marine retail demand.5
Shockwave Medical Inc. (SWAV), a G33 holding, reported revenues rose 194% year-over-year, in excess of the consensus estimate, together with profits that well exceeded estimates. Management also guided revenues for the full year to exceed expectations. The provider of products to treat cardiac disease benefited from a new product and increased medical procedures post-Covid.6 Shares rose 18.22% for the week
Union Pacific Corp. (UNP), a G50 holding, increased its dividend by 10%.7 Yield on the new rate is 2.25%.
Did you know…
Argentina was given its name because it was thought that the country was going to be rich in silver, Argentum being the Latin name for silver. Ironically, Argentina has been rich in many minerals except silver.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 5-16-22
3 All weekly changes in company stock prices: Yahoo Finance
4 Bureau of Labor Statistics 5-11-22
5 LCI Industries press release 5-10-22
6 Shockwave Medical press release 5-9-22
7 Union Pacific press release 5-12-22
Advisory services are offered through American Retirement Advisors, Inc., a Registered Investment Advisor in the State of Michigan. Insurance products and services are offered through American Retirement Solutions an affiliated company. American Retirement Advisors, Inc. and American Retirement Solutions are not affiliated with or endorsed by the Social Security Administration or any government agency. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Michigan or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Moreover, this material has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.
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