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“The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them. Stand by your stocks as long as the fundamental story of the company hasn’t changed.”

~ Peter Lynch

Good evening:

Despite the prevailingly negative sentiment about the market, we entered May with the S&P 500 almost exactly where it was one year ago: it closed April 2023 at 4,169, slightly higher from its close on April 30, 2022–4,132. You wouldn’t have known it by looking at trading activity in the first half of the week, which saw markets down on recession fears and the FOMC meeting on Wednesday.

The FOMC decision–a unanimous vote to hike rates by 25 bps–was never really in question. The Fed’s press statement and Fed Chair Jerome Powell’s press conference were the focus of attention, and based on those, Head of Research Tom Lee described the Fed action as a dovish hike. “We think the further chance of rate increases is low,” he said in our weekly research huddle. “Inflation is going to continue to fall, and the labor market is softening,” he asserted. To illustrate, he pointed out, “Tuesday’s JOLTS report (job openings) showed a steeper than expected decline for March and is only starting to reflect what we are seeing in jobless ...