July Is an Important Month for Stocks

When Will Inflation Ease? | Gas-Saving Tips That Actually WorkGas-Saving Tips That Actually Work | Created for {EMAIL} | [Web Version]( July 1, 2022 CONNECT WITH KIPLINGER  [LinkedIn]( [Facebook]( [Twitter]( [Instagram ]( [Youtube]( [SIGN UP]( ⋅ [WEBSITE]( [] What's in the Works [] The market is coming off an undeniably bad first half of the year – in fact, as we mentioned in yesterday’s [Closing Bell](, the S&P 500’s 20%-plus decline was the [index’s worst performance since 1970](. But most midyear outlooks from the analyst and strategist set aren’t treating a second-half rebound as a given. Greg Marcus, managing director of UBS Private Wealth Management, for instance, says “volatility is likely to remain elevated until we see convincing evidence that inflation is moderating, recession risks are receding, and geopolitical threats are declining.” But whichever way the market ends up heading, Marcus says July should end up being a determining factor. “After a tough first half of the year, we believe July will undoubtedly be a pivotal month for the future direction of markets, with the start of second quarter earnings season, key inflation reports and the next Federal Reserve meeting,” he says. “As it relates to earnings, consensus estimates for 2022 and 2023 remain largely unchanged from the start of the year, even though stock prices have declined considerably since then. Weak guidance could finally force cuts to consensus earnings estimates, which would likely add further downward pressure on stocks. During this [next earnings reporting season](, if companies show they can continue to navigate this challenging environment and maintain profit margins, they are likely to be rewarded by investors.” [Trusted Financial Advice Backed by Personal Attention]( At Vanguard, we're invested in you. Which is precisely why we've created Vanguard Personal Advisor Services®, providing remote access to financial advisors, real-time goal tracking, and more confidence you'll meet your goals. There's never been a more perfect time to [get started](. ADVERTISEMENT [] Continued [] Investors take note that the June consumer price index report to be released on July 13 will likely show another large increase. Even though gasoline prices appear to be easing a small amount right now, average gas prices in June were 11.5% higher than in May. Therefore, expect that the CPI as a whole in June will likely rise nearly the same as May’s 1.0% increase. The inflation rate for the past twelve months could tick up to 8.7%. This will likely not be welcome news to those hoping for an easing of the Federal Reserve’s planned interest rate hikes to fight inflation. However, the July CPI report, to be released on August 10, should be a much lower number. Since mid-June, oil prices have declined 8%, and prices at the pump have begun to ease a bit. Prices of some agricultural commodities have begun to trend downward, suggesting an easing of some food prices in the near future. An easing of supply constraints of retail and other goods will also remove some pressure on business costs. While monthly increases in the CPI will be smaller going forward, the twelve-month percent change will stay high at 8% or more through the end of the year because previous jumps are baked in the cake. Beginning in 2023, we will see a marked decline in the reported 12-month inflation rate. Free download, [The Kiplinger Letter's Forecast](. 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