Welcome back to the Monthly Market Wrap from YCharts, where we review and break down the most important market trends for advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.
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Inflation data was mixed in June, as the US Inflation Rate rose back above the 8.5% level last seen in April, to 8.58%. US Core Inflation, on the other hand, saw a slight decline of 0.14 percentage points to 6.02%, which suggests food and energy were among the main culprits for rising prices. The employment situation was rather stable—May’s unemployment rate stayed at 3.6% for the third consecutive month, and initial jobless claims hovered around the 230K low mark for all of June. Finally, new single-family home sales surged 10.7%, bucking a four-month downtrend, but existing home sales fell for the fourth straight month.
Short-term interest rates shot up in June following the Fed’s announcement of a 75 basis point rate increase, the largest since November 1994. The rate on 1-Month T-Bills was 1.28% as of the end of June, representing a monthly increase of 55 points. The 3-Month T-Bill stood at 1.72% while the 6-Month T-Bill surpassed 2.5% for the first time since March 2019, logging monthly increases of 56 and 87 points, respectively. Longer-term interest rates rose in June as well—the 5-Year Note along with 20-Year and 30-Year Bonds all ended June above 3%, but the 10-Year finished the month below the 5-Year and even the 3-Year, at 2.98%.
Can you believe 2022 is already halfway over? (We sure can’t.)
Similarly, many are still in shock that the S&P 500 and NASDAQ ended the first half of 2022 in bear market territory, while the blue-chip Dow Jones Industrial Average is firmly in a correction.
You might be wondering, who are the biggest culprits dragging these indexes lower?
YCharts Scatter Plot reveals the answer. For the Dow, 22 of its 30 components have posted negative returns year-to-date. The biggest laggards are Disney (DIS) and Boeing (BA), both down 30% YTD and 50% from their all-time highs:
Both Value and Growth stocks are firmly in negative territory on a trailing twelve months (TTM) basis. The iShares Russell 1000 Value ETF (IWD) is down 7% over the last twelve months, while its more cyclically-sensitive Growth (IWF) counterpart settled 19% lower as of June 30th, 2022 after briefly entering bear market territory in June. Year-to-date, Value is down 13%, and Growth is 28.2% lower, driven largely by each style declining at least 8% in June.
US Retail and Food Services Sales contracted for the first time in five months, falling 0.27% in May, largely as a result of increased cost pressures. June’s US ISM Manufacturing PMI reading sank 3.1 points MoM to 53, still in the “expansion” range of 50 or greater but steadily trending downward from its high of 64.1 set in March 2021.
Last month we surprised you with the fact that inflation declined for the first time in seven months. This month, we must unfortunately take that back, as the US Inflation Rate rose to 8.58%, an increase of 0.32 percentage points. However, US Core Inflation, which excludes the food and energy sectors, declined by a slight 0.14 percentage points to 6.02%. Overall, prices increased in May, marked by the US Consumer Price Index rising nearly 1%, but Consumer spending (PCE) was also up 0.6% in May.
The price of Gold in USD fell for the third straight month, down to $1,825.50 per ounce, as of June 24th. However, gold is up 1.1% in the first half of 2022. As a result, the SPDR Gold Shares ETF (GLD) fell 1.6% in June, but gold miners fared much worse, with the VanEck Gold Miners ETF (GDX) tumbling 13.7%. The outflows from gold and gold miners came as the US Dollar strengthened against major currencies, despite persistent inflation continuing to weaken the USD’s purchasing power.