We hope you had a safe and enjoyable holiday last week. Despite the holiday-shortened week, there was plenty of news and market action. Both the S&P 500 and NASDAQ indices reached new all-time highs. Notable stocks, including Meta (Facebook) and Tesla, saw significant gains, with Tesla up 27%, erasing its year-to-date losses. Bond yields also moved lower after two weeks of increases.

A major driver of the lower yields and strong stock gains on Friday was the June unemployment report. The unemployment rate rose to 4.1%, its highest since Q4 2021. Although the headline number of 206K jobs gained beat expectations of 190K, other details were less positive. For instance, May's strong job gain was revised down from 272K to 218K, and April's from 165K to 108K. Annualized wage growth also fell below 4% for the first time since June 2021. In addition, initial jobless claims have been trending higher, and job openings trending lower. As the head economist for Strategas recently wrote: "Small cracks, but not big cracks. U.S. economic data is slowing but are not overly worrisome yet." The markets seem to agree, with long-term bond yields slightly lower and increased expectations of a Fed rate cut in September.

This week, all eyes will be on key inflation data, with the Consumer Price Index (CPI) and Producer Price Index (PPI) released. Federal Reserve Chair Jerome Powell will also give his semiannual testimony before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. Additionally, second-quarter earnings reports begin, with major financials like JPMorgan, Wells Fargo, and Citi reporting on Friday. Delta Air Lines reports earlier in the week. Given the recent airport traffic and the long lines at their Sky Lounges, earnings might start on a positive note.

Looking ahead, it will be interesting to see how the divergence between corporate earnings growth expectations and GDP growth reconciles. Corporate earnings have been strong, with S&P 500 companies showing over 8% year-over-year growth in operating earnings and 11%+ in reported earnings for the second quarter. This marked the fifth consecutive quarter of improving year-over-year earnings growth. Expectations are for above-average operating earnings growth of 12%+ in 2024 and 15%+ in 2025. This economic momentum supports the stock market and mitigates some valuation concerns. However, GDP growth was below average in Q1 2024, and recent economic data has deteriorated. The Federal Reserve Bank of Atlanta's GDPNow predicts Q2 2024 GDP growth at 1.5%. In other words, the overall economic growth has been below average given the 20-year average growth rate of 2.0%.

In summary:

 

Stay invested. Stay diversified. Stay disciplined.

 

If you have any questions or comments, please let us know at strategists@brinkercapital.com or at rusty@orion.com. Thank you for your time and trust. See you next week!


 

Get Your Own Market Commentary

Client-Friendly Weekly Wire

Want a version of Weekly Wire you can send directly to your clients? Subscribe to our Weekly Wire newsletter and get a client-friendly version every Monday. Simply download, add your firm's logo, and use with your clients!

Subscribe Now

 

Key Data

Stocks, Bonds, Alternatives, & Real Assets as of July 5, 2024

Security Name

Risk Score

1 Wk

1 Mo

QTD

YTD

1 Yr

3 Yr Ann.

Global Equities (60% US, 40% Intl)

100

1.85%

2.76%

1.85%

12.67%

21.28%

5.90%

S&P 500 Total Return

102

1.98%

4.11%

1.98%

17.57%

27.10%

10.26%

Dow Jones Industrial Average

97

0.69%

1.58%

0.69%

5.52%

17.20%

6.37%

NASDAQ 100 Total Return

122

3.62%

7.22%

3.62%

21.73%

35.26%

12.38%

TV Benchmark

107

2.10%

4.30%

2.10%

14.94%

26.52%

9.67%

Morningstar US Large Cap

102

2.55%

5.38%

2.55%

20.84%

31.57%

11.04%

Morningstar US Mid Cap

113

-0.41%

-0.74%

-0.41%

4.82%

12.49%

2.73%

Morningstar US Small Cap

125

-0.90%

-1.30%

-0.90%

0.93%

10.56%

-0.25%

Morningstar US Value

98

-0.40%

-0.57%

-0.40%

6.39%

14.43%

7.53%

Morningstar US Growth

126

1.40%

3.93%

1.40%

12.50%

22.13%

1.94%

MSCI ACWI Ex USA 

98

2.04%

1.34%

2.04%

8.20%

14.44%

1.61%

MSCI EAFE 

101

2.17%

0.00%

2.17%

8.04%

15.08%

3.88%

MSCI EM

98

1.96%

4.63%

1.96%

9.79%

13.70%

-3.61%

Bloomberg US Agg Bond Index

27

0.71%

0.40%

0.71%

0.00%

3.99%

-2.83%

Bloomberg Commodity Index

70

1.60%

1.06%

1.60%

6.83%

6.03%

6.05%

Wilshire Liquid Alternative Index

25

0.47%

0.60%

0.47%

4.16%

7.89%

1.46%

US Dollar

10

-0.73%

0.98%

-0.70%

3.75%

2.03%

4.46%

Bloomberg US Treasury Bill 1-3mo

1

0.10%

0.47%

0.10%

2.78%

5.53%

3.14%

Source: Morningstar

The TV Benchmark represents an average of the S&P 500, Dow Jones IA, and NASDAQ 100 return indexes. The Orion Risk Score represents risk relative to the global equity market.

 

 

Interest Rates as of July 5, 2024

Rate

This Week

1 Wk Δ%

13-Wk Treasury Yield

5.22%

0.01%

10-Yr Treasury Yield

4.27%

-0.07%

Bloomberg US Agg Yield

4.99%

-0.10%

Avg Money Mkt Yield

5.13%

0.00%

Avg 30-Yr Mortgage Rate

6.99%

0.03%

Sources: Yahoo Finance, S&P Global, Crane Data, BankRate

 

 

Key Economic Data Last Week

Data Point

Expectation

Actual

ISM Manufacturing

49.2%

48.5%

ADP Employment

160,000

150,000

ISM Services

52.8%

48.8%

Nonfarm Payrolls

200,000

206,000

US Unemployment Rate

4.0%

4.1%

Sources: MarketWatch, First Trust

 

 

Key Economic Data This Week

Data Point

Expectation

Release Date

Consumer Credit

$8.0B

7/8/24

Consumer Price Index (CPI) YoY

3.1%

7/11/24

Core CPI YoY

3.4%

7/11/24

Producer Price Index (PPI) YoY

--

7/12/24

Core PPI YoY

--

7/12/24

Source: MarketWatch

 

More Just for You

Want More Resources?

Unlock a wealth of market commentary resources from Rusty Vanneman, Orion CIO – Wealth Management, and his team.

Explore Now
The views expressed herein are exclusively those of Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor, and are not meant as investment advice and are subject to change.
An index is an unmanaged group of assets considered to be representative of a select segment or segments of the market in general, as determined by the index manager for the purposes of managing a specific index. You cannot invest directly in an index.
The CFA® is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute — the largest global association of investment professionals. To learn more about the CFA charter, visit www.cfainstitute.org.
The CMT Program demonstrates mastery of a core body of knowledge of investment risk in portfolio management. The Chartered Market Technician® (CMT) designation marks the highest education within the discipline and is the preeminent designation for practitioners of technical analysis worldwide. To learn more about the CMT, visit https://cmtassociation.org/.
Think2perform’s Behavioral Financial Advice program integrates traditional finance practices with psychology and neuroscience to improve emotional competency and decision-making behavior that increases effective usage of the financial plan with clients. To obtain the Behavioral Financial Advisor (BFA) designation, participants must complete a self-directed course, which takes 20-30 hours to complete, and includes a mix of interactive exercises, videos and case studies. To learn more about the BFA, visit https://www.think2perform.com.
Wealth Management services offered through Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor.