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Controlled Dispersion

Controlled Dispersion

The S&P 500, Nasdaq, and Dow were dragged down by big tech last week, while the Russell 2000 sprung ahead. Healthcare and Utilities sectors led the way in gains, as Communications Services and Information Technology sectors experienced losses. As big tech stumbles, we see opportunities for currently concentrated markets to seek breadth and dispersion into many sectors that are ripe for increase. Above all, however, markets are anticipating news about July’s rate cut decision this week. The general speculation is for at least one cut this year in September, but the FOMC policy path remains uncertain.

Weekly Performance

Data Source: Factset®        Performance Period:      7/22/2024  to 7/26/2024

Last week economic reports reflected lower-than-anticipated home sales numbers, a higher-than-expected GDP, and slight upticks in personal income and spending. Existing and new homes sales came in below forecasts, with month-over-month drops from May of 5.4% and 0.6% respectively. Manufacturing PMI (Purchasing Managers Index) shrank from expectations at 49.5, while services PMI beat estimates at 56. GDP came in higher at 2.8% compared to the estimated 2.0%. The Personal Consumption Expenditures Price Index for June rose 0.2%. Personal income for June came in lower than expected at 0.2% compared to the 0.4% forecast. Personal spending arrived at the expected 0.3% increase. With inflation continuing to cool, albeit slowly, hopes of FOMC dovishness rose.

This week, data will offer color to the labor market. Early in the week are the job openings metrics. ADP Employment data and the next FOMC interest rate decision come on Wednesday. On Friday, hourly wages and the unemployment rate will be published. These readings will also indicate whether there is any weakness in the labor market. Interestingly, July’s interest rate decision will be determined two days before the unemployment report – the other key data point for the Fed’s determination besides inflation. No policy rate movement is expected in July, but all eyes will be looking to guidance for the September FOMC meeting.

Despite the slight overall increase in personal spending, Visa shares dropped about 4% on Wednesday following revenue that fell behind forecasts. According to management, while those with higher incomes were still spending, lower earners cut back. With how integrated Visa is throughout the economy, whatever deceleration occurs in spending could have a greater impact for the company than others. Another blow to Visa came from Crowdstrike’s global IT outage which impacted a broad range of consumer spending. Still, with the inflationary pressures and raised interest rates, it appears that consumers are pickier with how they are spending their money. These types of unforeseen issues, coupled with inflationary pressures and the recent major events in US political campaign gives us even more reason to reflect on God being in control. As Jeremiah 29:11 says: “For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future.”

Sources: Yahoo Finance, Reuters.com, and JP Morgan Market Insights

 Sources: Yahoo Finance, Reuters.com, and JP Morgan Market Insights. Securities offered through American Portfolios Financial Services, Inc. of Holbrook, New York, 631.439.4600,(APFS), member FINRASIPC.  Faithward Advisors is not owned or operated by APFS. Faithward Advisors offers Investment Advisory services through Ambassador Advisors, an SEC Registered Investment Advisor. Dream More, Plan More, Do More is a registered trademark of Faithward Advisors, LLC, Reg. U.S. Pat. & Tm. Off. Any opinions expressed in this forum are not the opinion or view of Faithward Advisors or American Portfolios Financial Services, Inc. (APFS). They have not been reviewed by either firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.