Our 2022 Mid-Year Market Update

Our 2022 Mid-Year Market Update

June 27, 2022
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We thought we’d be out of the woods by now, but the roller coaster continues. From a global pandemic, historic inflation, to an unparalleled housing market and a war in Ukraine, it’s hard to believe we’re only two years into this decade. The economic uncertainty and volatility of the last few months has many anxious (to put it mildly) to know where we’re headed.

While there are still many unknowns, we’d like to take the time to reflect and review what’s happened so far in 2022 and what you can expect going forward.

Stock Market Performance

It’s no secret that the stock market has seen increased volatility in the last couple of months—partly due to the uncertainty surrounding the war in Ukraine and partly due to the continued effects of historically high levels of inflation (8.6% for the 12 months ended May 2022). (1)

As of June 13, the S&P 500 is down nearly 21% for 2022. Big tech stocks bore the brunt of the declines, with companies like Amazon and Google parent Alphabet leading the way, dropping 39% and 27%, respectively. Losing over $500 billion off its market cap, Elon Musk’s Tesla has lost 45% of its market value since January, (2) leaving many experts to wonder if the bubble surrounding this industry is about to pop.

This year has seen concerns regarding the global economy reach new highs as many countries struggle in different ways:

  • The ongoing COVID-19 surge in China has prompted fresh rounds of lockdowns and stifled economic growth. (3)
  • The possibility of nuclear war in the conflict between Russia and Ukraine has many worried. (4)
  • High inflation in the U.S. is reducing demand for everyday goods and could send the economy into a recession. (5)

There’s no way to know exactly how all these events will unfold, but our best advice is to keep calm throughout the storm. Stock market volatility, and even recessions, are normal parts of the economic cycle, and sticking with a tried-and-true investment strategy is the best way to navigate uncertain times.

Employment Levels

Employment levels have steadily been returning to pre-pandemic numbers, with the May 2022 unemployment rate remaining at 3.6%, unchanged from April. This number, about 6 million people, is similar to the February 2020 pre-pandemic rate of 3.5%, or 5.7 million people. (6)

The payroll employment sector also saw an increase of 390,000 jobs in May, adding gains to the leisure and hospitality, professional services, retail, and manufacturing industries. (7)With these revisions, employment in February and March combined is 39,000 lower than previously reported, suggesting to many experts that the economy as a whole will continue to grow despite high inflation.

Interest Rates and the Federal Reserve

In response to surging inflation, the Federal Reserve yet again raised interest rates on June 15th by 0.75%, the largest hike in a single meeting since 1994. (8) As alarming as this already is, further raises are expected, up to approximately 3.4% by year’s end. This suggests another 1.75% in total rate hikes, spread across the remaining four scheduled policy-setting meetings this year, a much steeper path of rate hikes than was predicted in March.

There is much debate over how much rates should rise in order to effectively combat inflation. Too much of a rise could halt economic recovery, whereas too little could keep inflation rampant and send the economy into a recession. However, a Fed statement reiterated its resolve to ongoing increases, stating, “Overall economic activity appears to have picked up after edging down in the first quarter.” (9)

What Does This Mean for You? 

No, we don’t know exactly what the future holds. But don’t let that prevent you from taking the steps to protect yourself and pursue financial freedom. At Wilkinson Wealth Management, our team can help you navigate your financial challenges and opportunities with confidence. We prioritize building long-term relationships with clients and aim to be the person you call when life throws a curveball or questions arise. To learn more about our 2022 outlook and how we can help you, call 434-202-2521 or email susan.wilkinson@lpl.com to schedule an appointment.

About Susan

Susan Wilkinson is founder, president, and financial advisor at Wilkinson Wealth Management, a financial services firm in Charlottesville, Virginia, providing customized financial planning and strategies with a personal approach. With over 25 years of experience, she has a passion to come alongside her clients to help them fulfill their dreams and grow their wealth so they can be financially independent. Susan is known for listening to her clients, digging deep into their values, concerns, needs, and goals so she can build a financial plan tailored to their unique life. She prioritizes building long-term relationships with her clients and being the person they call when life throws a curveball or questions arise.

Susan is a CERTIFIED FINANCIAL PLANNER™ professional and has an MBA from Webster University and a Bachelor of Liberal Arts in Economics and Sociology from the University of Mary Washington. When she’s not serving clients, you can find Susan outside, either gardening, biking, or hiking. She’s a homebody at heart who loves music, especially playing the piano and cello. One of her favorite things to do is spend time with family, including her husband, Terry, her children, and her twin granddaughters, whom she affectionately (and appropriately) calls the “twinados.” To learn more about Susan, connect with her on LinkedIn.

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(1) https://www.usinflationcalculator.com/inflation/current-inflation-rates/

(2) https://www.cnbc.com/2022/06/14/what-experts-say-to-do-during-a-bear-market.html

(3) https://www.reuters.com/world/china/chinas-widening-covid-curbs-exact-mounting-economic-toll-2022-04-06/

(4) https://www.cnbc.com/2022/04/26/russia-ukraine-live-updates.html

(5) https://www.theatlantic.com/ideas/archive/2022/03/inflation-federal-reserve-recession/627079/

(6) https://www.bls.gov/news.release/empsit.nr0.htm

(7) https://www.bls.gov/news.release/empsit.nr0.htm

(8) https://finance.yahoo.com/news/fed-fomc-monetary-policy-decision-june-2022-120337242.html

(9) https://finance.yahoo.com/news/fed-fomc-monetary-policy-decision-june-2022-120337242.html´╗┐

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.