Monthly update: May 2022

Updated: Jun 2

May Performance: +6.0%

YTD: -30.79%

How on earth are we in June already? I'm writing this update with the rain lashing against the window here in London, let's hope it improves and we can all enjoy the Platinum Jubilee celebrations and the even longer Bank Holiday weekend.

It's been another interesting month but I'm really pleased to be able to say it has been profitable despite very difficult conditions. For the month of May, the Dow and S&P 500 eked out small gains, after last week’s strong rally chipped away at long losing streaks for the indexes. The Nasdaq Composite underperformed, shedding more than 2%.

However, the ride for us stock investors was far choppier than the month-end results suggest. The S&P 500 briefly dipped into bear market territory last month, trading more than 20% below a record at one point. The Nasdaq, meanwhile, is deep in a bear market — down 25.5% from an all-time high.

Those moves came as the Federal Reserve hiked rates by 50 basis points to quell an inflationary surge not seen in decades. Meanwhile, I've pored over a raft of mixed quarterly results that included some big misses from Big Tech names such as Netflix.

With the first-quarter earnings season nearly complete and the Fed having strongly signaled its rate hike intentions for its next two meetings, stocks could struggle for direction over the summer.

It’s best to wait and see how the next quarter shakes out. When we get into late July, we’ll have a better picture. Until then, I think we’re going to see very much a choppy market with a bias towards falling further into a bear market.

One potential source of optimism for markets overnight is Salesforce, whose first-quarter results topped expectations. The stock rose more than 8% in premarket trading.

Today we'll get an updated look at manufacturing and construction spending data. The first day of June also marks the start of the Fed’s plan to reduce its balance sheet, which ballooned to nearly $9 trillion during the Covid pandemic.

As always, I am keeping a very close eye on developments and will do my best to keep us profitable and seek out interesting opportunities.

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