Stocks had their fourth-straight losing week as the Iran conflict continued to push energy prices higher. One month ago, oil traded around $66 per barrel and is now hovering around $96. In spite of the potential long-term effects of conflict on the global economy, markets have been quite resilient and orderly. The Dow Jones Industrial Average (blue) and S&P 500 (green) are now down just over -3% year-to-date, while bonds (red and purple) are relatively flat, and international stocks (light blue) remain positive.
The Fed met this week and decided to leave interest rates steady, citing increased uncertainty and concerns of inflation sparked by higher energy prices. This decision means interest rates may potentially stay higher for longer, making US treasuries even more attractive as a safe haven investment in the current environment. When the 19 members of the Fed were polled, 7 forecasted no further rate cuts this year, 7 forecasted 1 rate cut, and 5 members forecasted 2 or more rate cuts this year.
Finally, the stronger US dollar, higher interest rates than expected a month ago, and profit-taking has led to a 3-week decline in the price of gold. While gold has had a tremendous run over the past couple of years, the near-term outlook for gold, like so many other things, is dependent on unfolding events in the Middle East.
Speaking of gold, spring and pollen have arrived in Atlanta.
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
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