Stocks got off to a rocky start this week. Inflationary concerns remain front-and-center in the minds of investors right now, although a surge in global COVID-19 cases is certainly not helping.
On the inflation front, thus far, Federal Reserve Chairman Jay Powell has stood firm on the belief that inflation is only expected to be a shorter-term, transitory issue tied to the reopening of the economy. While that may be true, some investors are getting concerned that the Federal Reserve may react too late in raising rates to eventually quell inflation. Prices continue to rise across the U.S. economy. Surging demand and supply chain bottlenecks have led to inflation in everything from raw materials such as iron ore to agricultural commodities.
The U.S. continues to be a world leader in the roll-out of COVID-19 vaccines, and thus the number of new cases has been trending in the right direction. That has not been true in other areas of the globe as cases continue to spike in Taiwan, India, and elsewhere. Nations such as Singapore are also becoming concerned about the potential dangers of COVID-19 variants that are emerging. In light of these more dire trends, President Joe Biden announced this week that the U.S. would share at least 20 million doses of U.S.-approved vaccines with other countries by the end of June.
Lastly, cryptocurrencies such as Bitcoin came under pressure this past week.* Last week Tesla’s CEO Elon Musk stated that his company would no longer accept Bitcoin as a payment method due to environmental concerns surrounding how the cryptocurrency is mined. Fast forward to this week and fuel was thrown on the fire as China reiterated a stance that its financial institutions could not accept cryptocurrencies as payment for products or services. Please remember that speculation and investing are not one and the same. I believe investors are best served by taking a long-term, fundamentally sound approach to investing that includes maintaining a well-diversified portfolio.
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.
*Cryptocurrencies are highly speculative and involve high degrees of risk, including a partial or total loss of principal invested. These types of investments are not suitable
for any investor that cannot afford to lose their entire investment.
Investing involves risk and the potential to lose principal.
The information provided, including references to individual companies and cryptocurrencies are for general informational and educational purposes only and is not a recommendation of any kind or investment advice.
Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed.
Diversification is an investment strategy that can help manage risk within your portfolio, but it does not guarantee profits or protect against loss in declining markets.