“The best time to invest is when you have money.”
-John Templeton
Here’s what you need to know this week:
- Stocks end their losing streak but still close the quarter in the red
- Markets brace for President Trump’s deadline and look ahead to an inflation double-whammy
Green Week, Red Quarter
Stocks gained ground last week as tensions in Iran appeared to ease slightly and raised the possibility of a ceasefire. The S&P 500 and Dow Jones both gained more than 2% while the tech-heavy NASDAQ posted a nearly 4% gain. This strong week broke the stock market’s five-week losing streak but was not enough to keep stocks from closing the first quarter of the year in the red:
This is the first down quarter since Q1 of last year. Of course, volatility is simply the price of admission to the stock market. Declines of more than 5% are commonplace; here’s every 5%+ decline since the bottom of the Great Recession:
You can see that we’ve had a moderate to severe drawdown every single year, including a decline of 18.9% just last year. However, you can also see in the top left corner that the average rebound easily outpaces the average decline. Drawdowns obviously hurt in the moment, but they’re part and parcel with gains in the market.
In other news, we received the nonfarm payrolls (NFP) report for the month of March last Friday. The report showed US payrolls adding 178,000 jobs in March, far more than the 59,000 expected by Wall Street analysts[1]:
This gain is a strong reversal from February’s steep decline and hopefully marks the beginning of a new uptrend. The report also showed unemployment falling from 4.4% to 4.3%.
Deadline
President Trump announced on Sunday that he is setting a hard deadline of Tuesday at 8:00 PM ET for Iran to reach a peace agreement[2]. Since I have to complete these by Tuesday afternoon I am unable to write whether a deal was reached and/or what the consequences were. As of writing, markets have held roughly even this week as investors wait to see the outcome of this deadline.
In other news, we have a one-two punch of inflation reports to round out the week. The Personal Consumption Expenditures (PCE) report for the month of February will be released Thursday; analysts expect the report to show monthly inflation at 0.4% and annualized inflation at 2.8%. This will be followed by the Consumer Price Index (CPI) report for the month of March on Friday. The CPI report will be much more closely watched since it will reflect the impact of rising oil prices. Analysts expect the report to show monthly inflation at 1.0% and annualized inflation at 3.4%, both stark increases from the 0.3% monthly and 2.4% annualized increases in CPI in February.
Even if we reach a quick peace deal with Iran, experts worry that damage to oil infrastructure may mean higher oil prices (and thus inflation) for many more months to come. These reports will be our first indicator of how much inflation to expect and the market will be watching closely.
What Else
- The Air Force rescued a lost American pilot after his F-15E Strike Eagle was shot down over Iran
- President Trump fired Attorney General Pam Bondi last Thursday; he has not yet announced a preferred successor
- Defense Secretary Pete Hegseth fired two of the most senior Army generals last week, raising concerns over military leadership
- The Michigan Wolverines defeated the UConn Huskies in the men’s college basketball championship
- The UCLA Bruins defeated the South Carolina Gamecocks in the women’s college basketball national championship
What We’re Reading
The Artemis II has set a new record of taking humans the furthest distance ever from Earth, surpassing Apollo 13. The mission will orbit the moon, making the crew the first humans in history to view the dark side of the moon with the naked eye, before returning to Earth this Friday. Click below to find a live tracker of the mission:
What’s Happening Downtown
The Farmer’s Market returns to Scissortail Park this Saturday, April 11th. The farmer’s market occurs every Saturday from now through October; this week’s will be a shortened preview from 9:00 AM to 1:00 PM. My wife and I visit the farmer’s market nearly every week so say hello if you see me! Click below to learn more:
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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