A quick glance at what’s driving markets.
Taking a closer look…
- Oil supplies are improving, but energy prices may remain elevated. Even though reports show increased oil shipments through the Strait of Hormuz, the ongoing risk of further military action continues to put pressure on oil prices.1 Additionally, it may take time for increased oil supply to lower gas and diesel prices due to refining timelines and higher transportation costs.
- Inflation eased in August but remains above the US Federal Reserve’s (Fed) target. August inflation came in slightly lower than expected, though some of the decline reflected a change in how the inflation data is calculated.2 Looking forward, the Fed is likely to stay focused on inflation when considering future interest rate decisions.
- Rising bond yields led to some volatility last week but may improve income opportunities. Higher bond yields may signal that US economic growth remains resilient. However, persistent inflation may warrant a measured policy response from the Fed. Higher yields may also provide an income boost to newly issued bond investments, helping drive future returns.
- Job layoffs have been historically low while corporate profits remain historically high.3 Strong corporate profits allow businesses to retain employees, which may further support consumer spending and the US economy.
- Earnings season is right around the corner. Expectations for US corporate earnings are high following strong second-quarter results. Industry estimates project nearly 30% earnings growth year-over-year.4 This is important because corporate earnings have been a key driver of stock performance over time.
Institutional Portfolio Manager, Strategic Advisers
"Markets were choppy last week given concerns about persistent inflation, rising bond yields, and uncertainty regarding future central bank interest rate hikes. Despite this, economic growth is positive and the outlook for corporate earnings remains strong. This may continue to help support stocks, which have posted healthy gains for the year."
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For over 30 years, Strategic Advisers and its dedicated group of seasoned investment professionals have helped clients reach their financial goals. Our team of portfolio managers, with specialized areas of focus in asset allocation and specific asset classes, along with our deep quantitative and fundamental research, drive our investment selection and risk management decisions on behalf of our clients.