Tag: stock market

Pensions’ Bad Year Poised to Get Worse

Mary Pat Campbell

Link: https://www.wsj.com/articles/pensions-bad-year-poised-to-get-worse-11652175002

Excerpt:

Losses across both stock and bond markets delivered a double blow to the funds that manage more than $4.5 trillion in retirement savings for America’s teachers, firefighters and other public workers. These retirement plans returned a median minus 4.01% in the first quarter, according to data from the Wilshire Trust Universe Comparison Service. Recent losses have further eroded their holdings.

“It’s a tough period,” said Jay Bowen, manager of the Tampa Firefighters and Police Officers Pension Fund. “Nobody is immune.”

The declines in stocks and bonds are inflicting pain on household and institutional investors in 2022. The S&P 500 has returned minus 13.5% year to date through Friday, while the Bloomberg U.S. Aggregate bond index — largely U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities — returned minus 10.5%.

Pension funds maintain huge portfolios of stocks, bonds and other assets, wielding significant power on Wall Street, where their purchases and sales can shift prices and investment managers vie for their business. Their losses can raise costs for governments and workers, squeeze municipal budgets and drive up taxes.

Author(s): Heather Gillers

Publication Date: 10 May 2022

Publication Site: WSJ

EXPLAINER: Why rising rates are unsettling Wall Street

Mary Pat Campbell

Link: https://apnews.com/article/coronavirus-pandemic-financial-markets-stock-markets-inflation-prices-96e01a1db876bd4ad7e183e8cb4874e8

Excerpt:

WHY ARE INFLATION AND GROWTH EXPECTATIONS RISING?

Coronavirus vaccines will hopefully get economies humming this year, as people feel comfortable returning to shops, businesses reopen and workers get jobs again. The International Monetary Fund expects the global economy to grow 5.5% this year following last year’s 3.5% plunge.

A stronger economy often coincides with higher inflation, though it’s been generally trending downward for decades. Congress is also close to pumping another $1.9 trillion into the U.S. economy, which could further boost growth and inflation.

Author(s): STAN CHOE and ALEX VEIGA

Publication Date: 26 February 2021

Publication Site: Associated Press

More Rate Scares Ahead for Stocks

Mary Pat Campbell

Link: https://www.wsj.com/articles/more-rate-scares-ahead-for-stocks-11614772800

Excerpt:

Expectations of a stronger economy count as a positive development for companies’ earnings prospects, but they are pushing long-term interest rates higher, with the 10-year Treasury recently yielding 1.41% versus 0.93% at the start of the year. That isn’t unusual, since long-term rates typically go up as the economy’s prospects improve, but then again stocks haven’t tended to be as expensive at the start of recoveries as they are now.

The S&P 500 trades at about 22 times analysts’ expected earnings over the next year, according to FactSet, which is close to its highest forward price-earnings ratio in 20 years. In December 2009, six months after the last recession ended, the S&Ps forward P/E ratio was about 14.

As a result, even relatively modest moves upward in Treasury yields, and therefore the relative attractiveness of bonds to stocks, can cause market spasms. This is particularly true of the richly valued technology shares that have been among the biggest market winners since last spring.

Author(s): Justin Lahart

Publication Date: 3 March 2021

Publication Site: Wall Street Journal