August 18, 2024
Volume 11, Issue 33
Weekly Recap
Domestic stocks recorded healthy gains last week on the back of positive news on both the inflation and growth fronts, which together bolstered hopes that the economy might still achieve a “soft landing.” The technology-heavy Nasdaq Composite led the gains and ended the week up 12.24 percent off its intraday lows amid the sell-off on August 5. Artificial intelligence chip giant NVIDIA was especially strong, gaining 18.93 percent over the week. Relatedly, growth stocks handily outpaced value shares. Consumer discretionary stocks also performed well, with Starbucks surging 24.50 percent Tuesday on news that it was replacing its CEO with one credited with engineering a turnaround at Chipotle. Likewise, Walmart gained 6.58 percent on Thursday following its earnings report, which beat consensus expectations. The company also surprised analysts by raising its profit and revenue outlook for the remainder of the year. Shares of Google parent Alphabet fell at midweek, however, following reports that the Justice Department was investigating breaking up the company, which would mark the largest such action since AT&T was dismantled in the 1980s.
By the end of last week, analysts polled by FactSet were estimating that the overall earnings for the S&P 500 had expanded by 10.9 percent in the second quarter versus the year before, which would mark the fastest pace since the end of 2021.
Along with Walmart’s guidance, official economic data suggested that the consumer was holding strong in the face of the cooling labor market. On Thursday, the Commerce Department reported that retail sales surged 1.0 percent in July, their best showing in 18 months. Gains were strongest in the volatile auto sector, but increases were broad-based and included a 0.3 percent increase in sales at bars and restaurants, a sign of healthy discretionary spending.
Last week’s inflation data also supported the positive overall sentiment. On Tuesday, the Labor Department reported that core (ex-food and energy) prices paid by producers was flat in July, ending three months of solid increases. Consumer price index inflation, reported Wednesday, was more in line with expectations but also seemed reassuring. Notably, the year-over-year increase in fell below 3.0 percent for the first time in well over three years.
News on the housing sector was less encouraging. On Friday, the Commerce Department reported that building permits fell below 1.4 million for the first time since the depths of the pandemic in 2020. Actual housing starts also fell to their lowest level in four years. Similarly, a gauge of builder sentiment released Thursday fell to its lowest level of the year. The yield on the benchmark 10-year U.S. Treasury note decreased through most of last week on the benign inflation data but jumped Thursday morning following the strong retail sales data.
Market Monitor
A full listing of market performance data is available here.
DQYDJ.com (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual stocks. Koyfin.com provides reams of data on individual stocks, including the ability to track total return — and just about anything else — over time.
In the News
The Consumer Price Index rose 0.2 percent month-over-month and 2.9 percent annually in July, the Bureau of Labor Statistics reported on Wednesday, marking the lowest annual inflation reading since March 2021. By comparison, last month’s CPI report indicated a slight 0.1 percent decline month-over-month in June and a 3.0 percent annual increase. Core inflation – CPI stripped of the more volatile food and energy prices – also increased by 0.2 percent from June to July and 3.2 percent since July 2023, the lowest annual increase since April 2021. The Federal Reserve will see one more CPI report before deciding whether or not to cut rates at its September meeting.
The Producer Price Index for final demand increased 0.1 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported Tuesday. Final demand prices rose 0.2 percent in June and were unchanged in May.
In the week ending August 10, the advance figure for seasonally adjusted initial jobless claims was 227,000, a decrease of 7,000 from the previous week’s revised level, the Labor Department reported Thursday.
Today’s housing market is the most difficult in decades, a great frustration for millennials and Gen Zers looking for a starter home.
Last Monday’s global market meltdown looks more like a brief tremor now, a fleeting panic unleashed by a small policy shift from the Bank of Japan and resurgent fears of a U.S. recession. But the way it unfolded so rapidly — and just as quickly faded out — suggests to some how vulnerable markets are to a strategy that hedge funds exploited to bankroll hundreds of billions of dollars of bets in virtually every corner of the world.
Why Warren Buffett has a mountain of cash.Time to rebalance?
Charts of the Week
I found the following articles to be of note. Some may be of interest only to advisors while others are aimed more broadly. You may hit paywalls below; many can be overcome here.
- 20 Lessons for a Successful Retirement from Christine Benz (John Manganaro)
- IRS Clarifies RMD Options for Surviving Spouses Under Secure 2.0 (Bloink & Byrnes)
- A Third of Older Americans Face This Health Threat. Advisors Can Help (Ric Edelman)
This is the best thing I’ve read recently. The funniest. The sneakiest. The most interesting. The most inspiring. The least surprising. Heists. Astonishing reporting. Mayonnaise?
The typical hourly wage for workers aged 15-19 years hit $15.68 in June, up more than 36 percent from the start of 2019 – outpacing the growth rate for workers of all ages on private payrolls, which climbed just under 27 percent across the same period, according to Fed data. It has never been more lucrative to be a teenager with a job in the U.S.
“Good ideas, carried to wretched excess, become bad ideas.”
~ Charlie Munger
Securities and advisory services are offered through Madison Avenue Securities, LLC, a member of FINRA and SIPC, a registered investment advisor. This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures, or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment, or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets.Madison Avenue Securities, LLC | 13500 Evening Creek Drive N, Suite 555 | San Diego, CA 92128 US
