PUT IN WORK (7/1/2024)

The stock market had yet another interesting but primarily uneventful week when all was said and done. The Nasdaq (QQQ) ended down a measly 0.2%, and the S&P 500 (SPY) followed suit, ending down an even lesser 0.1%. Monday saw some stocks fall significantly, with Tuesday through Thursday acting as an opportunity for investors to display market resilience.

Despite the poor performance of the Nasdaq and S&P 500 on Monday, other indices—such as the Dow Jones (DJI)—actually performed quite well. The reason for such an explicit discrepancy between these indices can be attributed to Nvidia (NVDA) and other semiconductor stocks, all of which fell throughout Monday. Nvidia alone fell the most it has in months, ending down 6.6% and heavily influencing both the Nasdaq and the S&P 500. Stocks climbed their way higher over the next several days, with most investors looking ahead at the personal consumption expenditures report, the Fed’s preferred gauge when analyzing the fight against inflation.

Naturally, when Friday came around, investors kept a close eye in hopes that the data provided would give further insight into exactly when the Fed would begin cutting interest rates. The data presented was favorable, showing that pressures eased in May. The PCE index remained unchanged for May, bringing the annual rate of inflation down to 2.6%, the lowest it has read in a little over three years. This is a fantastic improvement, especially considering the index rose by 0.3% in April. As it stands, most investors are still hoping for a September rate cut. It doesn’t appear that the Fed will wait for the 2% target to be met to cur rates, but it’s doubtful that we’ll see simultaneous cuts without further data confirming that the fight against inflation is going as planned.

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

PORTFOLIO UPDATE

Our stocks rose several percent in response to the PCE report. Small companies greatly benefit from rate cuts, and with further confirmation that rate cuts may come soon, it only makes sense that their stocks would benefit. We plan to hold all currently owned stocks for the foreseeable future. As always, thanks for reading, and happy investing.