June 2024 Investylitics

Horizon Advisor Network Investment Committee June 10, 2024

The members of the Horizon Advisor Network Investylitics Committee met on the afternoon of Monday, June 10th. Over the last month, markets continued their march toward new all-time highs, slightly surpassing the levels reached in late March. We were happy to have all of our committee members present to review and share perspectives from the economists and market strategists we follow.

After moving up significantly from late October 2023 to the end of March 2024, the S&P 500 index went through its first downturn of more than 5% in April. This was largely driven by two things. The first catalyst was the continuing trend of inflation reports coming in above expectations. Without further progress toward lower inflation, the markets have now pushed out expectations for any Federal Reserve Bank interest rate cuts further into the future. 

The second catalyst was unrest in the Middle East, as Iran sent more than 300 drones, missiles, and bombs directly into Israel. There was concern that this would lead to an escalation of the conflict there. Thankfully, as of now, things have not moved in that direction. This has allowed the market to move back to new all-time highs as first-quarter earnings for corporate America have once again exceeded expectations. 

The markets were also paying significant attention to the unemployment report released on Friday, June 7th. As you can see in our first chart below, the headline employment survey surprised to the upside and showed that 272,000 new jobs were created. However, the household survey showed a loss of more than 400,000 jobs. The household survey usually tracks the economy more closely at turning points.

We also know that the unemployment rate moved up to 4%. From a historical standpoint, the unemployment rate has never moved up by more than 1/2% without shortly thereafter being followed by a recession. The unemployment rate has now moved up .6% from its recent low of 3.4%. We will continue to watch and monitor developments in the employment markets.

There is also a growing divergence between hard economic data, which has generally been positive, and has led most politicians and economists to be cautiously optimistic. However, consumer sentiment surveys continue to point toward frustration and dissatisfaction with the current state of the economy.

We are watching this growing bifurcation in the economy. Those at the higher end of the income and wealth spectrum seem to be continuing to eat out, travel, and spend money, even in the face of higher prices. While those at the other end of the spectrum, which includes many young families, seem to be struggling with the cumulate impact of higher inflation and higher interest rates. We are seeing this show up in rising defaults in areas such as credit card and auto loan defaults.

The summer months tend to bring lighter trading volume to the markets. This can exacerbate volatility to both the upside and the downside. We also know that presidential election years tend to bring more volatility from the mid-summer political conventions until mid-October, just before the elections. While we would not be surprised to see a pickup in volatility over the next few months, we would not suggest making changes to your asset allocation strategy, unless your goals have changed. As you can see from the chart below, the market favors those who stay invested over long periods of time.

The committee members understand that seeing price swings in your portfolio over the short term can be unnerving. We wanted to bring you this information and perspective to help you stay the course toward achieving your long-term financial goals. As always, if you have questions about your particular situation, please do not hesitate to reach out to your advisor. We are here for you. Have a great day. 

© 2024 Jesse Hurst 

Senior Wealth Manager and CEO

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein.  Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.  Past performance does not guarantee future results.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

Sincerely,

Jesse W. Hurst, CFP®, AIF®
CERTIFIED FINANCIAL PLANNERTM
Financial Advisor

*Award Recipient Jesse Hurst 

*The 2021 ranking of the Forbes’ Best–in–State Wealth Advisors¹ list was developed by SHOOK Research and is based on in–person and telephone due–diligence meetings to evaluate each advisor qualitatively and on a ranking algorithm that includes client retention, industry experience, review of compliance records, firm nominations, and quantitative criteria (including assets under management and revenue generated for their firms). Overall, approximately 32,725 advisors were considered, and 5,000 (approximately 15.3 percent of candidates) were recognized. The full methodology² that Forbes developed in partnership with SHOOK Research is available at www.forbes.com. 

¹ This recognition and the due–diligence process conducted are not indicative of the advisor's future performance. Your experience may vary. Winners are organized and ranked by state. Some states may have more advisors than others. You are encouraged to conduct your own research to determine if the advisor is right for you. 

² Portfolio performance is not a criterion due to varying client objectives and lack of audited data. SHOOK does not receive a fee in exchange for rankings.