Chinese equities have been a major focus for investors in recent months, with catalysts ranging from DeepSeek’s artificial intelligence (AI) advancements to tariffs and trade negotiations.
Inflation’s effects on the economy, monetary policy, and the financial markets are wide-ranging. Higher inflation can constrain economic growth, tighten financial conditions, drive interest rates higher and even restrain stock valuations — higher inflation dampens the present value of future earnings and, historically, correlates with lower stock valuations.
Corporate buybacks, arguably one of the less-discussed catalysts, likely provided an additional boost to the market’s quick recovery. In this week’s Weekly Market Commentary, we explore recent repurchase activity, including who is buying back stock, how much, and how buyback companies have historically performed.
On Wednesday, May 28, the U.S. Court of International Trade (CIT) essentially blocked the majority of President Trump’s tariffs. A three-judge panel issued summary judgment against the tariffs enacted under the International Emergency Economic Powers Act (IEEPA), claiming they were unconstitutional and “exceed any authority granted by the President by IEEPA.”
First quarter reporting season was solid, but results didn’t offer much of a confidence boost in the outlook for the rest of the year.
In just a matter of hours last week, investors apparently decided that stocks were on sale, and it was time to buy. But nothing materially changed as consumers were still pessimistic about the future, firms were on the sidelines waiting to deploy capital amid tariff uncertainty, and the Federal Reserve (Fed) remained committed to their “Wait and See” stance.
Earnings continued to come in better-than feared, but “tariff uncertainty” continued to get flagged on most conference calls. The Federal Reserve (Fed) kept rates unchanged and stuck to its patient approach with monetary policy, despite notable downgrades to economic growth estimates and rising recession probabilities since their last meeting.
The municipal bond market faced significant volatility in April, driven by spillovers from a turbulent Treasury market. Treasury yields were pressured higher by rising inflation expectations; the Federal Reserve’s cautious policy stance, reduced foreign demand; hedge fund deleveraging, portfolio shifts toward cash, and structural illiquidity.
The softer tone toward China from the White House, President Trump’s pledge not to fire Federal Reserve (Fed) Chair Jerome (Jay) Powell, and renewed optimism about Fed rate cuts all helped drive a strong market rebound last week.
With little visibility into where tariff rates shake out and the effects on earnings, it’s hard to have much conviction in a year-end S&P 500 target. Given the high degree of uncertainty, we use scenarios and a wider range to get more comfortable with our target and to increase our odds of accuracy (though we recognize these targets are more art than science).
Speak with a local financial advisor
(305) 222-0977
The opinions, statements and forecasts presented herein are general information only and are not intended to provide specific investment advice or recommendations for any individual. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. There is no assurance that the strategies or techniques discussed are suitable for all investors or will be successful. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.
Any forward-looking statements including the economic forecasts herein may not develop as predicted and are subject to change based on future market and other conditions. All performance referenced is historical and is no guarantee of future results.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.
Event driven strategies, such as merger arbitrage, consist of buying shares of the target company in a proposed merger and fully or partially hedging the exposure to the acquirer by shorting the stock of the acquiring company or other means. This strategy involves significant risk as events may not occur as planned and disruptions to a planned merger may result in significant loss to a hedged position.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates.
To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
Tracking #1-05207230 (Exp. 12/22)
Securities Offered Through LPL Financial. Member FINRA / SIPC
View LPL Financial Form CRS
Atlantic Family Wealth, A registered investment advisor firm.
Copyright 2024. All Rights Reserved.
The LPL registered representatives with Atlantic Family Wealth may only discuss securities or transact business with
persons who are residents of AL, CA, FL, GA, IL, IN, MA, NJ, NM, NY, TX .
Investment advice offered through Atlantic Family Wealth, a registered investment advisor and separate entity from LPL Financial.
No information provided on this site is intended to constitute an offer to sell or a solicitation of an offer to buy shares of any security, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under securities laws of such jurisdiction.