Weekend Update, July 15th, 2024
Index, Sector & Asset Performance
The S&P 500 set new all-time highs last week led by small cap stocks for the first time in ages. U.S. equity and bond market rallies were spurred by Chair Powell’s testimony that opened the easing interest rates. Powell highlighted progress on inflation as well as concern that unemployment might rise too much if policy remains restrictive. A weaker CPI release showed the first monthly headline decline since the shutdowns and the mildest core increase since early 2021.
The S&P 500 closed above the 5,600 level for the first time.
On the interest rate front, the 2-Year and 10-Year Treasuries finished the week at 4.46% and 4.19%, respectively.
Economic Indicators and Earnings Commentary
Headline inflation was negative for the first time since 2020. Core CPI rose just +0.06% MoM and 3.3% YoY, both showing inflation cooling from May’s data and both coming in below consensus expectations (0.2% and 3.4%, respectively). Federal Reserve Chair Jerome Powell acknowledged the slowing labor market in testimony before the Senate Committee last week. “The latest data show that labor market conditions have now cooled considerably from where they were two years ago,”
On the back of the failed assassination attempt on former President Trump, prediction market odds shifted sharply in favor of a Trump re-election this November and now stand at roughly +60% compared with 40%-50% for most of the year.
Global Market Trends/Commodities/Currencies
The S&P 500 rose by 0.89%, notching its 37th all-time high of the year on Wednesday. In Europe, the FTSE 100 and the STOXX 600 rose by 0.60% and 1.45%, respectively.
Oil prices fell last week after the US inflation print reported an ease to prices in June. WTI and Brent crude ended the week lower at $82.21 and $85.03/bbl, respectively. Gold also finished the week lower at $2469.00/troy oz.
The US dollar fell last week after consumer sentiment fell to 66.0, below consensus expectations. The US dollar index closed the week –0.80% lower.
OHFG Exclusive Data & Charts
Seasonality has played out to a T year to date for a 4th year Presidential election year with the summer rally starting the last day in May. Per Mark Newton of Fundstrat, “the July rally has played out exactly as Seasonality suggests should happen during most Election years, with strong showing in the early part of July. After this week, this starts to turn a bit more negative and there could be a minor consolidation. However, given the correlation of Treasuries to Equities, this “consolidation” should prove brief and I do not expect any real 10% pullback, but should be buyable for added strength into mid-to-late Aug and early September is the period when longs might wish to use more caution, as cycles turn down pretty sharply into November and this also gels with seasonality trends.”
Oak Harvest Weekly Stock Talk: Delayed due to Hurricane Beryl
