Selling in May Did Not Pay
Weekly summary – As the debt ceiling bill heads towards the President’s desk, the market seemed happy with the outcome of the extended Biden/McCarthy negotiations. The S&P 500 was up 1.94% for the week with 0.73% coming at night and 1.21% from the daytime sessions.?The Russell 2000 was up 3.33% with 1.25% coming from the night and 2.06% from day.? A great week for investors, particularly for investors embracing night-tilted strategies like our 1.5x fund which picked up excess performance as both night and day were up.?
Exposure Night Day Buy and Hold
Large Cap 0.73% 1.21% 1.94%
Small Cap 1.25% 2.06% 3.33%
Tuesday – U.S. stocks opened higher as a debt-ceiling deal went to Congress after a tentative agreement was reached over the long weekend. Markets retreated during the day on the fear of more Fed rate increases as investors’ attention shifted from default concerns to understanding the contents and market implications of the agreement. The S&P 500 was flat for the day while the Russell 2000 was down 0.32%.
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Wednesday – Major stock indexes in the US dropped on Wednesday as investors were still waiting to see if the U.S. debt-ceiling deal could get approved prior to the June 5th deadline. New economic data showed over 10 million new job vacancies in April while most economists were expecting a modest decline. On the day, the S&P 500 declined 0.61% with the Russell 2000 down 1%.
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Thursday - Stocks climbed as the debt-ceiling agreement moved forward and economic data gave markets a boost. Economic data showed the job market remains strong while the activity in the manufacturing sector contracted. The day’s market rally was broad-based with both Large and Small Caps gaining about 1% on Thursday.
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Friday – Markets opened higher and continued to rally on Friday on the news of the debt-ceiling deal gaining Senate approval and a jobs report that crushed all expectations. The U.S. economy to the surprise of many added 339,000 nonfarm payroll jobs in May.?With less than two weeks before the next FOMC meeting investors still expect the Fed to leave rates unchanged. Ending a short trading week, the S&P 500 gained 1.45% and the Russell 2000 was up 3.56%.
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Next Week – After a significant (and narrow) rally accompanied by a VIX under 15, all eyes will turn to the mid-June Fed meeting.?It is going to be a nail biter as to whether they continue to hike or pause.?Potential liquidity withdrawal post debt ceiling resolution is another driver.
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