MarketBites: Stress Tests & Dividends
MARKET PERFORMANCE: 06/27/2022
Portfolio Manager Commentary:
After a major bounce last week, the market struggled to find direction on Monday. The tech-heavy NASDAQ underperformed as Treasury yields climbed.
Bank stocks successfully cleared the Fed's stress test. As a result, Bank of America boosted dividends, and Morgan Stanley announced a $20 billion stock repurchase plan. Nike reported earnings results that surpassed estimates.
Something investors should take note of is that fund managers are in the middle of end-of-quarter portfolio rebalancing, which could bring a lot of volatility to equity markets in the coming days.
Chart of the Day:
Interesting chart from Bloomberg showing the inflation rate (in blue), and the size of the Federal Reserve's balance sheet relative to the U.S. GDP (in white). The Fed's balance sheet grows when they purchase bonds and other securities to artificially pump up the U.S. economy. It seems the more money they pump into the system, the higher inflation peaks.
Source: Bloomberg Terminal