The FCMS Investment Committee is pleased to share the latest insights on the current financial market and economic developments.

Market Perspectives

Here are the top 3 things from our FCMS Investment Committee on current financial markets and economic developments:

1. 1. S&P 500 Hits Year-to-Date Highs

      As the Federal Government’s checking account rapidly approaches a zero balance, investors pushed the S&P 500 Index to year-to-date highs last week, led by both the market’s top (mega-caps) and bottom (small-caps). Our sense is that Wall Street just wants what is considered a man-made crisis to go away. The expected 11th-hour government resolution, which might arrive by the end of this week, may spark a brief rally with troubled cyclical stocks.

   2. Washington’s Debt Ceiling Drama Distracts from Rise in Treasury Yields

      The back-and-forth negotiations in Washington are distracting from another major market development of the past few weeks – the rise in Treasury yields across the yield curve. Both the 2- year and 10-year Treasury yields ended last week at post-Silicon Valley Bank collapse highs amid hawkish talk from Fed members. Recent Fed messaging indicates that there is a substitution between regional bank instability and the level of yields – no further bank failures could mean higher interest rates. We doubt this story is completely over, but we aren’t yet at levels where interest rates threaten equity valuations. We expect the market to focus on this after the debt ceiling drama has passed.

   3. Resilient US Consumer Strong Amidst Weakening Overseas Data and Strong Dollar

      Economic data continues to point to a resilient U.S. consumer, evidenced by stronger retail sales last week. Jobless claims, one of our key indicators of consumer strength, are also moving in a positive direction, pushing back the arguably most anticipated recession ever. However, data overseas has been weakening as the China reopening process hits some bumps, and there are signs of a slowdown in Europe. In a change from recent trends, the dollar rose last week on these developments. We are monitoring the situation, as this could be a headwind to international equities and may impact portfolio positioning in these markets.

What Happened Last Week?

Here is a recap of the top 3 things that happened last week:

• The market saw year-to-date highs in stocks (S&P 500) despite a lack of progress on the debt ceiling negotiations in Washington.

• Hawkish Fed commentary and a lack of further banking stress drove bond yields to post- Silicon Valley Bank collapse highs.

• U.S. economic data continues to point to underlying resilience.

What We’re Watching This Week

• Daily debt ceiling negotiations will be a headline grabber this week.

• Core PCE (personal consumption expenditures), the Fed’s preferred inflation gauge, will be released Friday. Last week’s FOMC (Federal Open Market Committee) meeting notes will be released Wednesday.

• While we are past the bulk of first-quarter company earnings, some consumer-facing retail companies and one many investors are watching, NVIDIA Corporation, report earnings this week.

To receive weekly updates from the FCMS Investment Committee, please subscribe to our blog and follow us on our social media channels for the latest information.

To learn more about FCMS Investment Management, please click here.

Securities and Investment Advisory Services offered through Founders Financial Securities, LLC (FFS). Member FINRA, SIPC and Registered Investment Advisor. The commentary in this report is not a complete analysis of every material fact in respect to any company, industry, or security. This material contains the opinions of the author(s) but not necessarily those of FFS, and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and do not constitute a solicitation to buy or sell any security or product and may not be relied upon in connection with the purchase or sale of any security or device. Index information is intended to be indicative of broad market conditions. The performance of an unmanaged index is not indicative of the performance of any particular investment. Individuals cannot invest directly in any index. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Investors should consult their financial, tax, and legal advisors before making investment decisions. Past performance does not guarantee future results. Materials above are produced by Horizon Investments, LLC, which is not affiliated with FFS. © 2022 Horizon Investments, LLC.