May 13 Weekly Market Update

The markets remained volatile this week as stocks struggled to find their footing. Weighing most on investors’ minds this week was inflation. Prices continue to rise across a wide swath of the economy. It remains to be seen whether these early inflationary trends will be transitory in nature.

This week the Department of Labor released April Consumer Price Index (CPI) data that helped fan some of the aforementioned inflationary concerns. According to the report, inflation accelerated at the quickest pace since September 2008. Prices rose notably in travel-related businesses such as hotels, airlines, and rental cars -- further signs the economy is reopening. The prices of used cars and trucks also surged. This week, prices at the pump jumped as well, although that had less to do with reopening the economy and more to do with a ransomware attack on the Colonial Pipeline, the largest fuel pipeline in the nation. The attack led to a shutdown and the national average for gas prices moved above $3 for the first time since 2014.

This was also a big week for the Department of Labor as it announced the results of its March Job Openings and Labor Turnover Survey (JOLTS). According to the JOLTS report, the number of U.S. job openings jumped to an all-time high, exceeding 8 million postings. Many employers are struggling to find workers to fill positions right now. This is happening due to a couple different factors. One, current unemployment benefits are generous, and two, lingering COVID-19 concerns have limited some individuals’ willingness to take on new jobs due to health concerns. While it is good to know there are ample job opportunities available, if some of these job openings do not get filled, it could slow the economic recovery.

It can sometimes be scary, if not frustrating, to see prices rise across the economy. It is helpful, however, to reflect on the simple fact that while the percentage gain may appear large, that is partially because prices were coming off a low base due to the pandemic. In the heart of the downturn in 2020, many businesses lost pricing power as demand fell. As the economy continues to heal and reopen, demand for goods and services will rise and consequently so will prices. As such, the recent inflationary forces are expected to be short lived. Once the U.S. economy gets back to some sense of normalcy, pricing increases should also normalize.

Be safe and be well.

Market comments are based on the S&P 500 index which is unmanaged and cannot be directly invested into.

Past performance is no guarantee of future results. Investing involves risk and the potential to lose principal.

Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed. This commentary is provided for general educational purposes only and is not a recommendation of any kind or investment advice