“You can have this for free!” I remember my mom and dad’s skepticism when someone would walk up to them and say that as we walked around our county fair when I was boy. My parents knew there was always a catch.
With the stock market doing so well and near all-time highs so soon after the pandemic, a constant question I’m being asked is: “Will we see a June Swoon?” After the first-quarter earnings season, mostly exceeding expectations, and with the markets so high one has to wonder, what’s the catch?
I understand the uneasiness the investors are feelings. In the last few weeks, we have seen some interesting things. Inflation (CPI) rose 4.2% on a year-over-year basis. The stock market danced a little in the middle of May before recovering at the end of the month. Probably, the most interesting thing we have seen is, as of June 3rd, the S&P 500 has gone over 250 days since its last decline of 5% or more. What makes that significant is the S&P 500 has averaged 177 days between declines of 5% or more since WWII.
The good news is that historically June isn’t known as a volatile month for the market. It’s had only five 5% or more declines (second lowest only to December) since WWII. June is tied for second lowest one-month decline, and in the past 10 years has averaged up 1.0%.
All that to say, a pullback in the market wouldn’t surprise anyone, but it is historically unlikely because major market weakness seldom starts in June. The summer months in general are traditionally sluggish for the stock market because of reduced trading volume. There is a lot of optimism (life without a mask is wonderful) about the pandemic recovery and though investors might be asking “what’s the catch?”, they are generally positive about the next few weeks of economic outlook.
I also think if more families were walking around county fairs together our country would be in a much better place, but that’s a discussion for another place.
Have a blessed week!
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All investment and financial opinions expressed are intended as educational material. Although best efforts are made to ensure the only information is accurate and up-to-date, occasionally unintended errors and misprints may occur. Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., 7th Floor, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”). Securities offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. PCIA and Private Client Services are separate entities and are not affiliated. Dr. Baker has attained his D.Min., the designation for Doctor of Ministry, and his AIF®, the designation for Accredited Investment Fiduciary®.
