Recession Fears Push Markets Lower

By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group

Equities finished lower as recession fears begin to rise.  Consumers appear to have changed their spending habits and it’s beginning to affect Summer vacations.  Last week, a survey was released that showed 83% of consumers have slashed personal spending due to soaring prices of food and gasoline.  In that same survey, 70% stated they had made changes to travel habits such as avoiding travel to expensive areas, postponing Summer vacations, and remaining within a 10-minute driving distance.  

Last week’s economic releases showed that Personal Spending declined from +0.6% in April to +0.4% in May.  The Fed’s Richmond and Dallas Manufacturing indices both declined substantially month-over-month.  Both Weekly Jobless Claims and Continued Claims disappointed last week, with Weekly Claims moving lower for a 4th consecutive week.  The Payrolls numbers due out Friday for June are expected to be lower than the previous month.  There are multiple Fed speakers this week and the market will be parsing the release of minutes from last month’s rate hike meeting to gleam any ideas about the Fed’s next moves.  So far, the market is still pricing in a 75 basis point rate hike later this month.  There are concerns that 2nd quarter corporate earnings will show the beginning of an earnings recession.  Expect trading to be choppy this week as the market digests this information.