It was another tough week for the stock market and one that certainly tested investor pain tolerances as the major benchmarks all hit new lows for the year this week. The Dow Jones Industrial Average closed slightly lower and the S & P 500 closed slightly higher on Friday. The Nasdaq closed up 1.4%. All three of them were lower for the week. The S & P 500 was the biggest weekly loser — and in fact, saw its worst week since March 2020, the month the Covid pandemic was declared. Driving the action once again this past week was inflation fears . The Federal Reserve stepped up its fight against spiraling prices, hiking interest rates by 75 basis points on Wednesday and seeing a post-Fed meeting rally that day. However, stock were slammed Thursday and seesawed Friday, as investors worried that the Fed’s more aggressive posture — while needed to try to quell inflation — would tip the economy into a recession. While words of encouragement may do little to make any of it feel better when the declines come week after week, we nonetheless want members to take some time over this three-day weekend to sit back and remember why they own stocks to begin with. The stock market is closed Monday in observance of Juneteenth. Despite how some may choose to approach the market, with a gamblers mentality or that of a trader simply flipping pieces of paper day-to-day and week-to-week, as long-term investors we must remember that these pieces of paper represent ownership in real businesses that consumers in the U.S. and all over the globe interact with every day. Right now, the sellers simply do not care about the underlying fundamentals unique to those businesses and that drive long-term growth. They are hyper-focused on the macroeconomic backdrop. Inflation? Sell! China still locked down? Sell! Russia still at war with Ukraine? Sell, sell, sell! Now, fundamentally, we must acknowledge that all of those factors will hamper near-term earnings from even the strongest companies, be it due to foreign exchange dynamics or margin pressure resulting from commodity price inflation and supply chain bottlenecks. But then again, that’s why we are where we are, in bear market territory with profitable growth stocks like Club name Alphabet (GOOGL) trading at lower valuations than their so-called value counterparts. If history is any guide, unless the world actually is ending this time (and as we’ve noted before, nobody will be around to pay you if you’re right on that bet), we have to be mindful that ultimately this too will pass. That’s not to say it won’t get worse or that a recession isn’t on the horizon. But in the end, history dictates that China will eventually reopen, we will stomp out inflation and Russia’s ability to continue these efforts is limited — be it because resources dry up or even the Russians become fed-up with their president’s unhinged efforts. If you do believe that these macroeconomic will pass, then the next question you should be asking is what things look like on the other side. Are we done using Google Search? Are business going back to on-premise data centers? Does customer analytics no longer matter? Is e-commerce dead? Has semiconductor use peaked forever? Will we have less of an appetite for US energy independence after the Russia fiasco? If the answer to these are yes, then maybe selling is warranted. However, in our view, none of these trends have peaked and the macroeconomic events driving the market are simply speed bumps on a longer timeline. As a result, we are staying the course, using history as our guide and being mindful that the reason equities have historically been the best house in the financial market neighborhood is because they compensate investors to endure the kind of volatility we are now experiencing. Lastly, we do want to stress that none of this is meant to be taken as justification for owning stocks that trade on sales-based multiples with no profit expectations for the foreseeable future. We are still hyper focused on identifying companies with strong underlying fundamentals driven by longer-term industry trends, that make stuff, do things, and can return profits to shareholders via dividends and buybacks. As was the case the prior week, no sectors managed to escape the indiscriminate market-wide selling pressure this week. All closed in the red led to the downside by Energy, followed by Utilities and Materials. The U.S. dollar index remained at around 104. Gold pulled back to the mid-$1,800s. WTI crude prices pulled back to around $110 per barrel. The yield on the 10-year Treasury stands at 3.23% after trading at late 2011 highs earlier in the past week. Looking back No portfolio companies reported earnings this past week. On the macroeconomic front: On Tuesday, the May Producer Price Index (PPI) was reported to have risen 0.8% monthly and 10.8% annually. Additionally the core PPI, which strips out food, energy and trade, rose 0.5% monthly and 6.8% annually. On Wednesday, retail sales for May were reported to have dropped 0.3% monthly, well below expectations for a 1% gain. Annually, retail sales were up 8.1% versus the year ago period. We also heard from the Fed on Wednesday when they announced a 75 basis point increase to the fed funds rate. On Thursday, initial claims for the week ending June 11 came in at 229,000, missing expectations of 220,000. May Housing Starts also came in worse than expected on Thursday, at a seasonally adjusted annual rate of 1.549 million units. Building permits for May came in at 1.695 million, also missing expectations. On Friday, industrial production was reported to have increased 0.2% in May while capacity utilization came in at 79%. What’s ahead Next week, no club stocks will be reporting earnings. But here are some other earnings reports and economic numbers to watch. Monday, June 20 Markets closed in observation of Juneteenth Tuesday, June 21 Before the bell: Lennar (LEN) After the bell: La-Z-Boy (LZB) 10 a.m. EST: Existing home sales Wednesday, June 22 Before the bell: Korn/Ferry (KFY), Winnebago (WGO) After the bell: HB Fuller (FUL), KB Home (KBH), Steelcase (SCS), Worthington (WOR) Thursday, June 23 Before the bell: Accenture (CAN), Apogee (APOG), Darden Restaurants (DRI), FactSet (FDS), GMS (GMS), Rite Aid (RAD)Smith & Wesson Brands (SWBI) After the bell: BlackBerry (BB), CalAmp (CAMP), FedEx (FDX) 8:30 a.m. EST: Initial Jobless claims Friday, June 24 Before the bell: CarMax (KMX) 10 a.m. EST: New home sales (Jim Cramer’s Charitable Trust is long GOOGL, JNJ, PXD, AMD, PG, HAL and CTZ . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
