July market recap

July market recap

Capital markets perspective July 17

Stocks powered higher in July, invigorated by signs that the central bank’s battles against inflation may prove successful without dumping the economy into recession. June’s consumer price report showed a 3% increase from a year ago. While still above the Fed’s 2% long-term target, the result was lower than most expected and caused many to rethink both inflation and interest rate assumptions for 2024.  

Meanwhile, US GDP was shown to grow at a 2.4% pace in the second quarter. This showed economic activity remains on a good trajectory but was not strong enough to stoke fears of more than one more likely interest rate hike.   

Major US and International indexes each finished roughly 3% to 4% higher for the month. Bonds were flat as the encouraging inflation numbers were offset by comments from Fed members suggesting they are not yet ready to declare victory on the inflation front.  

Market gains were widespread

Another positive was that market gains were widespread, including small cap and value stocks. Most of the rally in the second quarter was driven by just a handful of mega cap technology companies. Broader advances feel more sustainable if the 2023 rally is going to prove to be the start of a prolonged bull market.  

Earnings so far have been mixed. Aggregate S&P 500 earnings are projected to decline in the second quarter from last year but are on track to beat reduced analyst expectations.  

Diversified Empower Personal Strategies gained with markets. Smart Weighting in US equities outperformed capitalization weighted indexes, driven by higher returns from small cap stocks.  

Craig Birk, CFP®

Craig Birk, CFP®

Contributor

Craig Birk serves as Chief Investment Officer for Empower Personal Wealth. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to his work as the Chief Investment Officer for Personal Capital, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the CERTIFIED FINANCIAL PLANNER™ designation.

Disclaimer

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites. 

Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money. 

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements. 

Advisory services are provided for a fee by Empower Advisory Group, LLC (“EAG”). EAG is a registered investment adviser with the Securities and Exchange Commission (“SEC”) and subsidiary of Empower Annuity Insurance Company of America. Registration does not imply a certain level of skill or training.