Growing Shoes and Shrinking Prices

Last week saw NVDA continue its retraction from its June 20th high. Like many growing companies, filling the shoes as the giant in any sector can be daunting. Overall, it was a mixed week in equities and bonds. As we rocket into the Fourth of July holiday, we will be watching both markets on the screens and the burgers on the grill – stewarding legacies and lunch.

On Tuesday, the Consumer Confidence index for June fell to 100.4 from May’s 101.3, but remained above the consensus of 100.0. The report, which gauges American consumers’ outlook on the economy, revealed some optimism about present business and labor market conditions. At the same time, however, it hinted at pessimism for business and income in upcoming months. Wednesday brought the New Home Sales report, with 619,000 annualized sales for May, down from 698,000 in April, as well as the 640,000 estimate. The decrease was attributed to the higher mortgage rates and record-high house prices.

Weekly Performance

Data Source: Factset®        Performance Period:      6/24/2024    6/28/2024

Thursday saw Gross Domestic Product (GDP) and Pending Homes Sales data released. GDP, the most prominent measure of economic activity, came in soft, growing at 1.4% and matching the consensus. Pending Home Sales for May came in at -2.1%, lower than the projection of -0.4%, but a reprieve from the -7.7% print in April. Friday brought Personal Income and Personal Spending data, as well as Personal Consumption Expenditures (PCE). Personal Income edged higher for May, at 0.5%, as compared to April’s 0.3% increase. It also beat Personal Spending, which rose 0.2% for May, slightly higher than April’s 0.1%. PCE, the Fed’s preferred measure of inflation, came in unchanged for May, but rose 2.6% year over year.

This coming week sees additional economic data that will help fill in the details from May and June. On Tuesday, Total Vehicle Sales and JOLTS Job Openings data are released. Wednesday brings the ADP National Employment Report for June along with May factory orders numbers. After Independence Day, unemployment and hourly wages information from June will print.

Between new and pending home sales coming in softer than forecasted and a lower-than-expected increase in consumer spending, affordability is a topic on the American consumer’s mind. This is something that fast food restaurants are beginning to understand as they have witnessed waning demand. An investigation by FinanceBuzz revealed the sector has seen price increases that were almost twice the rate of inflation over the past decade. In response, quick service restaurants have begun emphasizing value. Most recently McDonalds, which led the way in price hikes, came out with deals like the “$5 Meal Deal” to bring customers back. Price cuts are also impacting retail, as large general stores have revealed plans to lower prices on merchandise. We watch the falling prices with a happy wallet and concerned mind, as we ask why consumers need luring back. Are they voting with their wallets or are they seeing their wallets empty?

It will be interesting to keep an eye on the price cuts and labor market data in the week ahead. As many Americans take Independence Day to commemorate our nation’s independence, markets will experience a shortened week in observance. In light of the celebrations, let’s remember the true source of freedom. “Now the Lord is the Spirit, and where the Spirit of the Lord is, there is freedom.” – 2 Corinthians 3:17.

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 FINRA, SIPC.  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.