Author: Chad Payne

Weekly Market Update | June 23, 2024

Weekly Recap

Domestic stocks recorded modest gains last week, helping push the S&P 500 to fresh all-time highs. The week also saw modest signs of a broadening and rotation in the market, with value stocks outperforming growth shares and most of the major benchmarks outperforming the technology-heavy Nasdaq Composite. Friday was a so-called triple-witching day, with roughly $5.5 trillion in options related to indexes, individual stocks, and exchange-traded funds expiring, according to Bloomberg and options platform SpotGamma.

The start of last week brought some additional evidence that easing labor demand and dwindling savings might be making consumers more cautious. On Tuesday, the Commerce Department reported that retail sales had increased only 0.1 percent in May, according to advance estimates, while falling a downwardly revised 0.2 percent in April. Notably, sales at bars and restaurants fell 0.4 percent, signaling less discretionary spending, in particular, but sales at grocery stores also fell 0.4 percent, perhaps reflecting recent price cuts in certain food categories (retail sales data are not adjusted for inflation). In a reversal of recent trends, however, manufacturing signals released the same day were somewhat stronger. The Federal Reserve announced that industrial production had expanded 0.9 percent in May, well above consensus expectations and the fastest pace in nearly a year. Factories were also operating at 78.7 percent of capacity, a tick above expectations and the highest level since last November.

Data released later in the week also suggested that the economy was stronger than indicated by the retail sales data. On Friday, S&P Global announced that its composite index of business activity had risen to 54.6 in June, according to preliminary data, its best level in over two years (levels above 50.0 indicate expansion). The services sector appeared to be in especially good shape, with payrolls increasing at the best pace in five months and rebounding from two months of declines. Encouragingly, selling price pressures in the sector were among the lowest recorded since the onset of the pandemic. Services providers continued to face higher wage bills, however, suggesting some pressure on operating margins. The lackluster retail sales data pushed longer-term U.S. Treasury yields lower, but Friday’s stronger S&P Global readings brought them back up to end the week modestly higher. 

Market Monitor

A full listing of market performance data is available here. (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual 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 Commerce Department reported Tuesday that retail sales grew by 0.1 percent in May and 2.3 percent annually – below the 0.2 percent month-over-month growth that economists had projected. Revised numbers for April’s sales growth now show that sales declined by 0.2 percent last month compared to March. The Federal Reserve is projecting only one interest rate cut this year, but if sluggish consumer spending continues, the central bank could consider multiple cuts, according to a Fed governor. 

The Congressional Budget Office revised its estimate for the 2024 budget deficit from $1.6 trillion to almost $2 trillion – a 27 percent increase on its February estimate – while the total national debt is projected to reach $50 trillion in the next decade. Much of this year’s increase seems to be driven by supplemental defense spending on Ukraine and Israel, President Joe Biden’s student debt “cancelation” initiatives, and increased Medicaid spending. 

Industrial production rose 0.9 percent in May. Manufacturing output posted a similar gain of 0.9 percent after declining in the previous two months. In the week ending June 15, the advance figure for seasonally adjusted initial jobless claims was 238,000, a decrease of 5,000 from the previous week’s revised level.

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.

This is the best thing I’ve read recently. The saddest. Adding insult to injuryOptimists and pessimists. Noam Chomsky in sum: “America bad.” RIP, Donald Sutherland. RIP, Willie Mays, the greatest baseball player I ever saw. 

The University of Main has developed the world’s largest and most powerful 3D printer. It can build a small house in 80 hours.

A committee is a group of people who individually can do nothing, but as a group decide nothing can be done.”  ~ Ranulph Fiennes

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 the 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

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