Jason Thomas, Chief Executive Officer and Chief Investment Officer of Savos Investments, one the Portfolio Strategists we utilize for client accounts, today wrote the following in his market summary for last week. Particularly interesting is what he notes about the tech companies that led the market last year and started the year quite overvalued…
U.S. stocks were up slightly for the week to end a strong month of April. The S&P 500 closed at a record high on Thursday, but sentiment didn’t feel frothy. For the week, Domestic Cyclicals (Financials, Retail) were the stand-out performers while Global Defensives (Healthcare Equip) lagged. Bond returns were generally negative, with the exception of corporate high yield.
The Federal Open Market Committee (FOMC) left the funds rate target range unchanged at 0–0.25% and left the policy outlook characterization and asset purchase policy unchanged. The Committee updated the post-meeting statement to acknowledge that economic data has been strong since the FOMC last met in March. Powell also made several noteworthy comments at the press conference following the meeting, particularly the view that current inflation pressures are transitory. Market expectations for 2023 were essentially unchanged after the meeting, with futures pricing implying about three hikes by the end of 2023.
Several of the megacap technology and retail companies that drove the S&P 500 in 2020 reported truly spectacular Q1 results this week. They have been the clear beneficiaries of the “work from home” and “you only live once” consumer themes. However, the lack of a strong upward move in their stock prices suggests that investors are not convinced that the unusually good times for these companies will survive the return to work/school expected this Fall.