FOMO-Fear of Missing Out Hits
Few things breed confidence in investors like an 8-month winning streak. Where do you stand? Were you “nervous” in October 2022 near the lows due to “inflation” concerns? Still waiting in March or June 2023 due “debt ceiling worries? Has “FOMO” now set in as you are feeling better and confident now that the S&P500 is over 4400+ because those stories have now passed?
Markets are closed today, Monday, June 19th, for the holiday. The cash S&P 500 index rose +2.6% last week and reached new 52-week high. Stronger-than-expected retail sales and Federal Reserve officials opting not to raise interest rates for the first time in 11 policy meetings boosted markets last week. The S&P 500 closed last week at 4,409.6, up from the prior week’s close of 4,299. The index hit a new 52-week intraday high at 4,448.5 on Friday but closed slower than Thursday’s closing level. Friday’s losses broke a six-day winning streak. The index is now up +15% in 2023.
Last week’s advance came as economic data continued to beat low expectations. A report showed US retail sales unexpectedly rose in May, led by automobiles and building materials. The Fed, which had raised rates for 10 consecutive meetings through May, chose to keep interest rates steady at its June meeting. This is expected to be a pause in rate increases rather than the end of the cycle, however short-term traders were relieved to see rates hold steady for the first time in several meetings.
Running down sector performance, as they have all year, technology stocks had the largest percentage increase of the week, climbing +4.4%,. The next best groups on the week were material names, rising by +3.3% and consumer discretionary stocks increasing by + 3.2%. The markets year to date lagging group, energy, was the only down group last week, dropping -0.7%.
The tech sector’s gains included shares of Oracle (ORCL), which jumped +14% on the week as the computer technology company reported fiscal Q4 results above analysts’ expectations amid revenue gains from cloud services. Shares of Ball Corp. (BALL) climbed +11% in the material sector as the aluminum packaging and aerospace technologies company’s CEO spoke to investors at a conference.
Carnival (CCL) shares led gains in the consumer discretionary sector as BofA upgraded its rating on the cruise operator’s stock to buy from neutral following “positive” meetings with the management. Following the meetings, BofA said it is more confident industry demand remains steady, the pricing environment is rational and bookings “in line with company expectations.” Carnival’s shares soared +21%.
On the downside, the energy sector’s losses came as Goldman lowered its investment ratings and price targets on many names in the sector. Shares of EOG Resources (EOG) fell -2.4% as Goldman Sachs downgraded its stock to neutral from buy while cutting its price target to $130 from $137. Diamondback (FANG) fell -2.7% as Goldman cut its price target to $154 from $163.
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Interesting Reads:
https://www.ft.com/content/900dcadf-3029-4528-87a3-63c21ec3a21d
https://www.wsj.com/articles/lots-of-hiring-but-not-so-much-working-d4f01646?mod=economy_lead_story
