Volatility has been the name of the game for the S&P 500 (SPY) the last few weeks as investor optimism over the summer has turned into pessimism recently. A host of concerns have kept investors ruminating, with higher prices being the most pressing. We saw disappointing employment and CPI figures recently, but things aren’t as bad as they seem. The economy is on solid footing and continues to grow, which should help support equity prices going forward. I’ll discuss this and more below….(Please enjoy this updated version of my weekly commentary published October 14, 2021 from the POWR Value newsletter).
The markets have been pretty choppy over the past couple of weeks as investors continue to monitor anything that could stop the bull market. The latest being ongoing price increases. High demand and supply chain obstacles drive the price of commodities higher, specifically oil and , leading to the recent pessimism in the markets.
However, I view these concerns as temporary as the economy has strong underlying fundamentals that should propel markets in the upcoming months. If we use the Conference Board U.S. Leading Economic Index as a gauge of future growth, its current level of 13.7% six-month annualized growth is a high number historically, which indicates the economy is on solid footing with more growth to come.
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