2nd Quarter Market Update

We hope this 2nd Quarter Market Update finds you well. As we reach the end of the second quarter of 2023, we want to provide you with an update on the markets and key developments that have occurred in the economy.

Overall Economic Overview:

The second quarter of 2023 has witnessed a mixed economic landscape characterized by a series of challenges and opportunities. While there have been signs of recovery and growth in certain sectors, others continue to face volatility and uncertainty due to various factors such as global market dynamics, geopolitical tensions, and the ongoing impact of the COVID-19 pandemic.

Market Analysis:

Despite the prevailing challenges, the stock market has shown promising signs of recovery and adaptation. Through the first half of this year the S&P 500 gained 16.89%, while the Dow Jones Industrial Average increased by 4.93%. Small company stocks, as measured by the S&P SmallCap 600 returned 6.03% (source: S&P Dow Jones Indices LLC). 

Economic Indicators:

Here are some key economic indicators that have contributed to shaping the markets this year:

1. GDP: Real gross domestic product (GDP) decelerated at an annual rate of 2.0 percent in the 1st quarter of 2023. This is down from the fourth quarter of 2022, when real GDP increased by 2.6%.

2. Employment: June’s payroll report by the Bureau of Labor Statistics showed an increase in nonfarm payrolls of 209,000, a slight miss from the 230,000 economists’ consensus estimate. This miss broke a streak of 14 straight upside beats of the monthly jobs data estimates.  

3. Inflation: The Consumer Price Index’s Core measure will be released soon; it is estimated to be a .3% increase in June and a year-over-year measure of 5%.

Monetary Policy: Economists generally agree the Fed will push the federal funds rate up to 5.5% by the end of the summer, with two .25% increases. After which the Federal Reserve could soon stop hiking rates for the foreseeable future.

Looking Ahead:

As we enter the third quarter, we anticipate both opportunities and challenges on the horizon. Could higher rates lead the U.S. economy into a recession? We think it’s possible as the Conference Board’s Leading Economic Index (LEI) signals a recession in the U.S. The LEI generally provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term. The LEI has contracted for 13 consecutive months through April 30th, 2023. There have been only two longer streaks in history, in 1973 and 2007; both ended in a recession.     

In conclusion, the second quarter of 2023 is void of clear economic direction. Despite the prevailing uncertainties, Ballast Advisors remains committed to guiding you through the uncertainty. We appreciate your continued partnership as we navigate these economic times.

Disclosure:

The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice. The third-party material presented is derived from sources Ballast Advisors consider to be reliable, but the accuracy and completeness cannot be guaranteed. Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request.