If you compare the stock market value from the end of 2019 to the end of 2022, it is amazing to realize that over those three years, the S&P 500 was up 18.8%. Yes, you read this right!!! During those three years, we experienced the entire economic, financial, political and geopolitical world going to hell-in-a-handbasket. And yet, from pre-pandemic to the end of 2022, the market is up 18.8%.
Pop the champagne, let the party begin…..ya, well maybe. By the time you read this the FED will have announced another rate increase – probably 0.75%. The last time I looked, Ukraine and Russia are still at war. Russia has suspended participating in the shipment of grain from Ukraine. Inflation while seeming to slow is still above an acceptable level. Employers are still having difficulty hiring enough qualified people. Gas prices are off their highs. Food is expensive. Car prices are coming down and inventory is up a bit. With the increased interest rates, real estate values have mellowed. Soooo, what is happening? Why is the stock market up?
What factors influence market prices? There are hundreds of factors affecting market prices and two of them are the actions of Congress and the President. Among the other factors are: inflation in the U.S. and around the world, global politics, war & rumors of war / saber rattling, oil prices, supply of oil and gas, employment, domestic civil unrest, wage levels, availability & cost of childcare, interest rates, home construction, Central Bank policy in the U.S. and around the world, the value of the dollar relative to other global currencies, and on and on and on. Does it really matter who controls Congress and the Oval Office?
This morning I read that the US economy added 315,000 jobs in August extending a 20-month streak of jobs growth following the Covid recession of 2022 when 10M people lost their jobs. Over 525,000 jobs were added om July. Unemployment is solidly below 4%. This is good news, right? During the second quarter of 2022, over 75% of the companies making up the S&P 500 reported company profits above what they had been estimating. 70% of those same 500 companies have reported revenue higher than expected. Good news? This represents an earnings growth of over 13% from the same period in the previous year. This means that for the sixth straight quarter, year-over-year growth for the S&P 500 has been over 10%. More good news, right?
