UPDATE

🌤️ Happy Friday

Good morning. Thanks for reading this Friday's issue! Thursday is in the rear-view mirror, meaning the weekend is just around the corner. We hope you can finish the week strong and are looking forward to some R&R.

Read time: 3 minutes

WEEK IN REVIEW

📈 Market Performance

S&P 500 (1-month), via Google Finance

While we didn’t have a MARK IT. issue last week, we were still keeping an eye on the market. The second half of July was generally consistent for the S&P 500. Friday, July 14, and onwards saw the index holding above the 4,500-point mark with only a 0.64% drop last Wednesday after the Fed’s interest rate hike.

We’ve been discussing in detail what’s pushing and maintaining this growth. Ultimately, it again comes down to big tech companies like Apple, Amazon, and to some degree, Microsoft.

• But is now a good time to invest in these companies? It’s hard to say, as the value of some of these stocks has ballooned in recent months and could very well be overvalued. However, that’s why diversification exists. If you buy into an S&P index fund and tech stocks happen to decline, hundreds of other companies comprise the fund and can help retain value.

% Fed’s Interest Rate Hike

via pxfuel

In June, most Fed officials decided to pause interest rate hikes and hold at 5.00-5.25%. This decision was the result of better-than-expected news that the inflation rate was slowly inching back down to the goal of 2%. (Source: Reuters)

The goal of the Fed is not to hike rates as fast as possible to bring inflation down, as this can have carryover effects on borrowers and homebuyers in the economy. Rather, the Fed has been deliberate in its decision to raise rates; although the decision to hold in June was still surprising since inflation was still around 4% and the Fed was on a 10-meeting streak of raising rates.

Currently, the rate of inflation is at or around 3%, which was a justification for increasing the interest rate by another 25 basis points to 5.25-5.50%. While nothing is set in stone, the Fed may be reaching the end of its rate hike journey as signs show inflation is closing in on 2%. (Source: Forbes)

🫵 How Do Rates Affect You?

From an investing standpoint, higher interest rates can be beneficial through certain mediums. U.S. Treasuries (notes, bonds, and bills) increase their yields when interest rates increase. A 2-year treasury note, for example, now provides a 4.891% annual yield if bought today. While not as high as the S&P average of 9%, Treasuries are generally regarded as less risky because they are bought through the U.S. government. (Source: CNBC)

If you believe Treasuries can be added to your investing strategy, we encourage you to do more research. Here are some starters: TreasuryDirect, Investopedia

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Nothing MARK IT. publishes constitutes professional and/or financial advice, nor does any information published by MARK IT. constitute a comprehensive or complete statement of the matters discussed.