“Natural” Resources

Markets rallied on the heels of the mid-September Fed rate cut, and the major indices reached for record highs last week. The S&P 500 sector leaders were Materials and Utilities, while the laggards were Energy and Health Care. The week also brought more key economic data and massive news for energy and technology, especially for the Commonwealth of Pennsylvania.

Weekly Performance

Data Source: Factset®        Performance Period:      9/23/2024  to 9/27/2024

Last week, the economic calendar sent mixed signals. The good news: GDP increased 3% as expected for the quarter. Inflation rose less than anticipated, when PCE price index revealed a year-over-year increase of 2.2% for August—a number close to the Fed’s target of 2% inflation. Thursday’s initial jobless claims numbers came in below forecast. However, September services and manufacturing PMI fell behind August’s readings, and consumer confidence slumped to its lowest in three years from pessimism on current income, labor market and business conditions. The housing market appeared to remain relatively steady, with the House Price Index for August increasing only 0.1%. Pending home sales increased a slight 0.6%, falling between the forecast and July’s negative reading. New home sales fell 4% from July, but still beat estimates.

This week offers a snapshot into the labor market, with job openings data, the ADP employment report, initial jobless claims, the unemployment rate, and hourly wage data. For other factors of the economy, auto sales data, factory orders, and construction spending will bring insight into past sales and future business optimism later in the week.

What do artificial intelligence (AI) data centers and nuclear energy power plants have to do with each other? Quite a bit, as it turns out. AI data centers use a ton of energy—so much that the International Energy Agency estimates that by 2026 the entire electricity demand of these centers could reach totals equivalent to what powers Japan. A single Chat GPT search requires around ten times more energy than the average Google search. With uncertainty surrounding the capacity of current power grids to handle the demand, prominent tech companies are beginning to get creative. Microsoft recently signed a 20-year deal with Constellation Energy to reopen the Three Mile Island nuclear energy plant in Pennsylvania.

Nuclear energy is currently the most dependable source of energy that exists, with maximum power production above 92% efficiency for the year. This is leaps and bounds above capacity factors of about 74% for geothermal and 57% for natural gas. Nuclear energy presents an incredible opportunity for tech companies in the scramble for increased power, and it will be very interesting to see how deals similar to Microsoft’s play out.

This impressive ability to generate energy, just like all the other wonders on earth, is a great reminder of God’s almighty hand and boundless nature: “For by him all things were created, in heaven and on earth, visible and invisible, whether thrones or dominions or rulers or authorities – all things were created through him and for him” (Colossians 1:16).

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.