PUT IN WORK (5/20/2024)

The stock market experienced phenomenal positive movement last week in response to last Wednesday’s CPI report. Quantifying said growth, markets were up across the board, with the S&P 500 (SPY) ending up 1.7% and the Nasdaq (QQQ) ending up an even more impressive 2.3%. This is the markets’ fourth straight week of positive gains, which has pushed both indices mentioned above beyond previous all-time highs. The confidence garnered from the April CPI report even allowed markets to close above said all-time highs, rather than simply grazing them for a few hours.

The big catalyst that investors were watching for last week was, of course, the CPI report. Thankfully for them, core inflation posted its lowest reading since April of 2021. Additionally, the monthly increase seen on the April report was the weakest it's been since December. The consumer price index increased 0.3% in April, sitting just below some estimates that it would increase by 0.4%. Over the last 12 months, however, CPI is up 3.4%, which was what the majority of analysts expected. Naturally, the Federal Reserve hopes to bring this number down to 2%, but progress is progress.

As we mentioned earlier, the market is climbing ever-higher, but that doesn’t mean volatility won’t bring it back down to Earth. A plethora of near-term variables could upend the current rally—take earnings, for example. While earnings have been mostly favorable this season, poor reports from companies such as Nvidia (NVDA)—a company that reports this Wednesday—could send stocks tumbling in the near future. We’ve seen it play out before and could see it play out again. Another potentially harmful outcome relates to investor behavior. If investors get too greedy, we may see stocks fall due to overbought assets. This is unlikely, of course, but there have been and will be many moments in the past and future where investors send stocks higher than they deserve, resulting in mass sell-offs. The concept is applicable across all timeframes, and we, as investors, should take caution to prevent greed from killing any long-term rallies. There’s also the genuine possibility that the Federal Reserve’s next meeting, which takes place on June 11th and 12th, will disappoint investors, putting a dent in their hopes. All of this is to say that the market is uncertain, and investors should be both careful and aware of current events and circumstances. We’re personally very optimistic about our future, but we’re simultaneously consciously cautious.

(Nasdaq ETF (QQQ) price from May 2023 - 2024 — each candle is 1 week. Chart provided by tradingview.com.)

PORTFOLIO UPDATE

Most of our stocks fell in line with the market, rising 1-3% on the week with the exception of two. Unfortunately, one stock we own—Akoustis Technologies (AKTS)—fell nearly 30% on the week due to poor earnings, making them a heavy outlier in our portfolio’s weekly performance. On a slightly more positive note, C3.ai (AI), another stock in our portfolio, performed exceptionally, rising 10%. We plan to hold all currently owned stocks for the foreseeable future. As always, thank you for reading, and happy investing.