“Worrying about the future is like watching a leaf fall and trying to predict where it will land. Stop trying to guess where the wind will blow and get to work.”
-James Clear
Here’s what you need to know this week:
· Stocks continued their climb last week
· Markets take a slight pause on a credit downgrade
Melt Up
Stocks posted moderate gains every day last week, a move commonly known as a melt up. This type of move is typically seen as a more encouraging sign than the large jumps we’ve seen over the last few weeks because it indicates that more certainty is returning to markets. Last week’s gains were driven by two primary catalysts; the first was the Consumer Price Index (CPI) report for the month of April. The report showed monthly inflation at 0.2% and annualized inflation at 2.3%[1] which is the lowest annualized print since February 2021:
This lower inflation number may give the Federal Reserve more wiggle room to cut interest rates in the near future, although the specter of tariffs remain a wild card. Fortunately, we have gotten more clarity on tariffs as well. President Trump’s economic team has continued to hammer out a deal with Chinese negotiators while other large trade partners such as India and Vietnam have indicated they are close to cutting deals. These potential deals have caused Wall Street analysts to revise their estimates for the actual impact of the tariffs:
Of course, these deals aren’t set in stone yet and details could change, but for the moment the market appears optimistic that a resolution is in sight.
Breather
Stocks snapped their six-day winning streak on Tuesday with the S&P 500, NASDAQ and Dow Jones all posting slight declines. There was no individual catalyst that broke the streak, oftentimes buyers simply get exhausted after multiple days of gains. The one potential reason for pessimism was the downgrade of the US credit rating by Moody’s Ratings, one of the three major credit rating firms. Moody’s lowered the US rating from Aaa, the highest possible rating, to Aa1, the second highest rating last Friday afternoon. Moody’s cited the swelling budget deficit and increasing interest expense as reasons for the downgrade[2].
Stocks seemed to shrug off the credit downgrade initially and eked out a small gain on Monday. Perhaps investors were mindful of the fact that the US has never defaulted on a debt in its entire history. Or possibly they were aware of stock performance in the wake of past downgrades. This is actually the third time the US has had its credit rating downgraded; the first was by the S&P Ratings agency in 2011, and the second was by the Fitch Ratings firm in 2023. In both instances US stocks were higher after six months and meaningfully higher twelve months later:
Of course, every time is different and many market conditions differ today from 2011 and 2023, this is just meant to show that the US credit rating itself does not matter as much as the US continuing to pay its debts. In the short term, tariff negotiations will continue to take center stage.
What Else
· Congressional Republicans continue to debate the details of President Trump’s planned tax bill
· Former President Biden was diagnosed with an aggressive form of prostate cancer
· Pope Leo XIV was officially inaugurated as the new pope on Sunday
· A Mexican Navy sailing ship crashed into the Brooklyn Bridge on Saturday, killing two crew members
· A series of storms ravaged the Midwest with more expected tomorrow
· India & Pakistan continue to skirmish despite an uneasy ceasefire
· Former
· The OKC Thunder play game 2 against the Minnesota Timberwolves tomorrow night at 7:30 PM CT on ESPN
What We’re Reading
NASA’s James Webb space telescope recently focused its powerful eye on Jupiter and revealed new details about the gas giant. Auroras, similar to the Northern Lights on Earth, were detected near Jupiter’s North Pole; click below to see images and video of the auroras directly from NASA:
· https://science.nasa.gov/missions/webb/nasas-webb-reveals-new-details-mysteries-in-jupiters-aurora/
What’s Happening Downtown
Fourth Fridays returns to the West Village District this Friday, May 23rd. This event takes place on the fourth Friday of each month during the warmer months, is free to attend and takes place from 6:00-10:00 PM. This event features live music performances, deals from local restaurants & shops, interactive art classes and more. Click below to learn more:
· https://westvillageokc.com/fourth-fridays/?mc_cid=bd8c7d9aec&mc_eid=71bf387036
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, Brandon Ingerson, Jenni Hess