Stocks and bonds are lower this week, but remain positive for the month of May. US stocks are leading the way this month (green), followed by non-US stocks (red), corporate bonds (pink), then US treasury bonds (blue).
There are at least three major factors weighing on the market this week:
- A few major companies missed their revenue and/or earnings expectations.
https://www.cnbc.com/2024/05/30/kohls-kss-earnings-q1-2024.html
https://www.cnbc.com/2024/05/30/salesforce-stock-fall-earnings-revenue-miss.html
https://www.cnbc.com/2024/05/22/target-tgt-q1-2024-earnings.html
- Slow, or no progress in the fight to get inflation to the Fed’s 2% target is causing investors to reconsider their previously optimistic interest rate cut expectations.
https://finance.yahoo.com/news/jamie-dimon-says-chance-fed-102302864.html
- There are some signs the consumer may be turning cautious in their spending.
https://www.cnbc.com/2024/05/30/bank-of-america-ceo-consumer-spending.html
I’ve heard some scary reports of skyrocketing credit card delinquencies, with the delinquency rate doubling in the past 3 years. It appears to be true.
Some investors are concerned this is a bad sign for the economy. It’s not.
Three years doesn’t really tell us much. Is today’s reading of 3.16% historically high? Was 1.6% three years ago normal? If we zoom out to look at more history, we can see that 3.16% is the highest level in the past 12 years, but lower than any reading 1991 – 2011.
The near 0% interest rate environment 2009 – 2022 was an anomaly that kept credit card delinquencies well below their historic levels. What we’re currently seeing is a move towards a “normal” delinquency rate now that interest rates are back to their historic norms.
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
Harmon Financial Advisors, Inc. is an independent, fee-based financial planning firm and an independent Registered Investment Advisor. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. and Harmon Financial Advisors, Inc. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Harmon Financial Advisors, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc.
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