Menu
GDP growth

Markets Dip as GDP Forecasts Get Downgraded

  • Stocks were down across the board last week, with domestic stocks down each of the four trading days during the holiday-shortened week. We saw global markets (represented by the MSCI All Country World Index) down -1.2% and domestic stocks (represented by the S&P 500 Index) down -1.7%. U.S. small companies (represented by the Russell 2000 Index) fell the most, down -2.8%.
  • With the delta variant in full effect and central banks slowing down their accommodative policy, there has been some downgrades to expected GDP growth in the U.S. for 2021. While the expectation is still for sizable growth around 6%, some analysts are predicting that some of the growth that was projected for 2021 will spill over into 2022.
  • At the sector level, there has been a rotation from cyclical, value-oriented sectors to more traditional growth sectors. On a year-to-date basis, energy, financials, and real estate are still leading the pack within the U.S. With that said, sectors like communication services (Google and Facebook) and technology have caught up and only slightly trail this year.
  • The European Central Bank made a policy change last week that was expected. They slowed their bond purchase program and increased the inflation forecast. This is a similar path that we expect the Fed to take later this year, with the slowing of their asset purchase program as the economy continues its recovery.
  • In the report of new filings for federal unemployment benefits, we saw the lowest claims level since the pandemic started. The report last week showed 310,000 new claims in their weekly report.
  • An area to keep any eye on over the next month or two will be Congress. As the Biden administration works to pass the $3.5 trillion spending program, there is still a disconnect with progressives and moderates of the party. The key will be where Senator Joe Manchin lands, as he’ll be a crucial vote and has openly backed a more modest proposal that would spend closer to $1-2 trillion. Lastly, decisions will need to be made on the federal debt ceiling as Treasury Secretary Janet Yellen says all efforts to avoid breaking the ceiling have been exhausted.
  • I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.

Mike Horwath

Mike heads the internal Investment Committee that is responsible for the investment direction of the firm. He works closely with Diversified’s financial planners to support the investment side of the lifelong financial planning process. Lastly, it’s Mike’s responsibility to oversee the ever-changing global investment landscape and work with the planners to evaluate the impact on each of our client’s strategies.

Related Posts

Financial planning and Investment advisory services offered through Diversified, LLC. Securities offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC. Headquartered at 80 State Street, Albany, NY 12207. Purshe Kaplan Sterling Investments and Diversified, LLC are not affiliated companies.

Diversified is a registered investment adviser, and the registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC.

A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax advisor, accountant, or other professional concerning the application of tax law or an individual tax situation.

Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

Please note, the information provided on this website is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. The content on this website is not intended to provide tax, legal, or accounting advice, and you are advised to seek out qualified professionals that provide advice on these issues for your individual circumstances.

Financial planning and Investment advisory services offered through Diversified, LLC. Securities offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC Headquartered at 80 State Street, Albany, NY 12207. Purshe Kaplan Sterling Investments and Diversified, LLC are not affiliated companies.

Diversified, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. Diversified only transacts business in states in which it is properly registered or is excluded or exempted from registration.  A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. Diversified does not provide tax or legal advice and individuals should seek the advice of their own tax or legal advisors for specific information regarding their situations. Investments in securities involve risk, including the possible loss of principal. The information on this website is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

www.finra.org | www.sipc.org | Privacy Policy