That was quite the week. What started off as a slow build to major earnings announcements from Amazon, Microsoft, Apple, Google, Meta, and others, not to mention a Federal Reserve meeting, ended with a furious rally, with the S&P 500 surging 5.5% from Tuesday’s close to the week’s closing bell. For the month, the benchmark returned more than 9%, its biggest monthly gain since 2020¹.

The Federal Reserve meeting met expectations with a 0.75% Fed Funds rate hike. But Chairman Powell did a masterful job with his remarks, starting off by talking tough on inflation then shifting tone and commenting on how future rate decisions will be made meeting by meeting and will be data dependent. His comments left open the possibility that future rate hikes will be less than expected and set the stage for a risk-on rally.

And tech earnings fueled that rally. Amazon was the big winner, with its stock jumping more than 10% following reported strong revenue growth. The only negative for Amazon was its equity-stake in Rivian, which hurt reported results but didn’t impact cash flow². Apple also delivered, with record revenue and strong iPhone demand. Microsoft reported mixed results, but strong guidance pushed shares higher. And though Alphabet’s (AKA Google) numbers missed their mark, strong cloud numbers encouraged market participants to bid the shares higher.  

Powell’s remarks also played well to the bond market, with the Aggregate Index continuing to push off its mid-June lows and ending the month on a high note. Up fractionally for week, the Index returned more than 2% for month¹.

We now get an extended break from the Federal Reserve, which next meets September 21. Scads of economic data between now and then will help determine the Fed’s next move. The hope remains a soft landing for the economy, reduced inflation, and continued good corporate earnings. While we wait for the Fed, earnings reports continue this week with more than 120 companies in the S&P 500 reporting, including Starbucks, Eli Lilly, Marathon, and Moderna.     

We’ll enjoy the improved returns and be following the data closely this week and make changes to our strategies if it warrants.  We again reiterate that this environment requires immense levels of patience, balance, and discipline from investors.  We think investors should be prepared for continued volatility through the balance of the summer.

Thank you for your confidence in our team during this heighted period of volatility,

Asset Management Department

Sequoia Financial Group

Sources:  1.  Bloomberg/Bloomberg News, 2. Morningstar Direct