PUT IN WORK (6/24/2024)

The stock market had a hard time maintaining its high momentum and elevated footing last week, but even so, it managed to end on a positive note. The Nasdaq (QQQ) ended up 0.2%, and the S&P 500 (SPY) ended up 0.3%. This is standard on the surface, but what happened throughout the entire week?

Well, on Thursday, these indices were up significantly more. The Nasdaq was up a whopping 1.6% on the week, and the S&P 500 was up a similarly impressive 1.4%. However, this was no longer the case by Thursday’s end and Friday’s open. Stocks fell across the board, and a holiday splitting the week in two certainly didn’t help. It’s hard to say what caused this market hiccup, but ultimately, it’s likely a result of the inevitable.

Stocks had been riding a high for nearly eight weeks, with 4 of those weeks resulting in higher highs consecutively. This is incredibly impressive. The market has been on top of the world lately, and investors have taken advantage of that fact, pushing it along with the help of AI stocks—primarily Nvidia (NVDA), which is our most substantial example of such. Nvidia has seen a meteoric rise in market gains over the last six months and has undoubtedly helped the market along in a big way. As AI stocks have been such a prominent factor in the market’s movements as of late, consequently, so have chip stocks. Each of these sectors fell dramatically on Thursday and Friday compared to the rest of the market. After the holiday break, investors recognized that these stocks were rapidly becoming overvalued, with many still being overvalued even after Thursday and Friday. Stocks such as Nvidia, Broadcom (AVGO), and Micron (MU) all fell, and although they could pick back up as we head into the new week, it’s also entirely possible for their descent to continue. If it does, the market will likely follow suit again, but perhaps a long breather is just what the market needs to get everything back on track.

As discussed in last week’s issue, investors are still quite happy after digesting the most recent CPI and Fed news. Their hopes for a confirmed rate cut by the year’s end have stuck with them and helped carry the market to new heights seven days in a row. If these factors will play into yet another nice rally this week, only time will tell—but either way, we’re hopeful for the future.

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

PORTFOLIO UPDATE

Our portfolio fell in line with the market’s movements. While some stocks inched downward, others inched upward, leaving the portfolio’s performance relatively flat. Opera (OPRA), our most recent purchase, has, unfortunately, performed poorly thus far, but we believe in their product for the long term. We plan to hold all currently owned stocks for the foreseeable future. As always, thank you for reading, and happy investing.