“It’s a short walk from the penthouse to the outhouse, but it’s the same distance back.”
-Steven W. Beck
Here’s what you need to know this week:
· Stocks post the best quarter since 2020
· Midterm years are typically volatile; is this year different?
*Author’s note: I’ll be out of town from today through next Tuesday, so next week’s newsletter will be an explainer on the state of Social Security’s funding instead of a market update (still written by me of course)*
Blowout Quarter
Stocks posted an incredible run over the last three months. The US stock market as a whole gained 15.52% in the second quarter, marking the best quarter since Q2 of 2020:
This rally was largely driven by stocks related to AI infrastructure, especially semiconductor and memory manufacturers. This rally came directly out of a decline due to the Iran War in February and March, but the gains more than made up for the losses and the S&P 500 finished the quarter up roughly 9% for the year[1].
Midterm Mayhem
The midterm elections are quickly approaching and the airwaves are already beginning to clog with campaign ads. Midterm years tend to be more volatile for markets because the minority party tends to make gains in Congress and can throw the presidential administration’s agenda into question. Since 1950, midterm election years have been the weakest performing years for stocks with an average of 7.5% annualized gains[2].
The two most recent midterm years (2018 and 2022) have been the two worst market years since the Great Financial Crisis in 2008. 2018 saw a 20% drawdown in the 4th quarter and finished the year down 4.4% while 2022 bled for most of the year and finished the year down 18.1%[3]. In both years the markets were also contending with the Federal Reserve hiking interest rates, a move that the Federal Reserve is currently debating again.
You may be asking why the market has seemed so serene in spite of the midterms and potential rate hikes. This is actually typical for this time of year; in fact, over the last 75 years, the stock market has *never* marked its high of the year in June:
It’s possible that markets will begin to show signs of anxiety as we head into the fall. However, the best move (as always) is to tune out the noise and stay focused on your long-term goals. As Warren Buffett said: “The stock market is a device for transferring money from the impatient to the patient”[4].
What Else
· The US economy added 57,000 jobs in June according to the BLS’s nonfarm payrolls report
· The USA officially celebrated its “semiquincentennial”, or 250th birthday, on Saturday
· US military officials reportedly warned Iranian leaders of Israeli assassination attempts, another sign of the US and Israel’s increasingly strained relationship
· NATO members pledged an additional $80 billion aid to Ukraine to help end its war with Russia
· Taylor Swift and Travis Kelce were married in Madison Square Garden on Friday
What We’re Reading
NASA has launched a daring mission to stabilize a sinking satellite. The Neil Gehrels Swift Observatory has been studying gamma ray bursts while circling the planet for the past 22 years but has slowly sank over time and is in danger of falling back to Earth. Last Wednesday NASA launched a robotic spacecraft known as LINK that will attempt to latch onto the Observatory and then slowly pull it back to a stabilized orbit. Click below to read more about the mission:
What’s Happening Downtown
Midtown is hosting their quarterly Pop-Up Market this Saturday, July 8th. This event runs from 10:00 AM to 3:00 PM and features more than 50 local vendors selling food, coffee, clothes, art, jewelry and more. Click below to read a full list of vendors:
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess, Hannah Hartman
[1] Morningstar [2] BlackRock [3] BlackRock [4] Investopedia