Watch the CPK Market Action Report: August 2024
The tech heavy Nasdaq seems to be losing its luster as the hopes for lower interest rates drive investors towards the severely undervalued small and mid-cap investments. Will the trend continue or will signs of a slowing economy shy investors away from following the herd?
Watch the Market Action Report now:
Market Action Report
August 2024
Intro Tag
The tech heavy Nasdaq seems to be losing its luster as the hopes for lower interest rates drive investors towards the severely undervalued small and mid-cap investments. Will the trend continue or will signs of a slowing economy shy investors away from following the herd?
That action starts. NOW!
Index Performance
Markets played a little switcherooo on investors this month. The S&P 500 only finished slightly higher, up .86%. However, the Dow Jones Industrials took over as the outperformer posting a 4.27% gain led by Real Estate, Utilities and Financials. On the other hand, Technology and Communications lead the way as the worst performing sectors, pushing the Nasdaq lower by -1.57% for the month.
Bond Update
Yields all found a path lower for the month. Considering that the inverted yield curve continues to inch closer towards reverting back to normalcy combined with economic reports that are showing signs of a slowing economy, the Fed revealed that a rate cut is “likely” to be the central bank’s next move rather than tightening. As such, the markets are now forecasting a 100% probability of a Fed rate cut in September.
Noteworthy Events
Notable events coming up later this month include trends of inflation with CPI on the 14th, Retail Sales on the 15th showing strength of consumer spending, the Jackson Hole Economic Symposium the 22nd through the 24th and of course Nvidia’s earnings on the 28th.
Wrap
Although July through October are notoriously volatile, investors are very challenged with a couple of pretty big dilemmas. First, can the high-powered mega cap stocks continue to accelerate earnings to keep the unbelievable momentum intact. Second, will interest rate cuts by the Fed be enough to create a movement to small and mid-cap stocks or will a slowing economy and rising unemployment create a level of fear to make investors go search for investments that are more suited for recessionary fears. Of course, we also have an election coming up at the end of the year and who knows what havoc that may have on the markets. If I haven’t perked your ears up just yet, let me leave you with this thought.
Take a look at this chart. Every instance that the 10yr/3mo yield curve spread inverted over the last 30 years, the S&P 500 continued higher before completely retracing the entire post inversion gains AND in some cases, the index fell much more. To put that a little more bluntly, if the S&P 500 don’t fall below 4,000 in the quarters ahead, it will be the first time in modern market history based on current market dynamics.
Our Focus
For the month of August, our models continue to hold a 50% allocation to the money market.
Our broad focus remains on Domestic Equities and Commodities.
Our focus in Domestic Equities is on Large Cap Growth and Large Cap Blend with an emphasis on Technology, Industrial, Financials, Consumer Cyclicals and Communication Services.
In Commodities, our focus is still on Industrial Metals and Precious Metals.
CPK DISCLAIMER
As a reminder, my current allocation is not a recommendation. Regardless of what happens next, investors like you need to have a simple and yet solid financial plan that reduces RISKS, COSTS and TAXES while securing the necessary income you need to maintain your lifestyle throughout retirement.
If you don’t have a plan OR you’re not comfortable with the plan you currently have, call me today to get pointed in the right direction.
I’m Chad Kunc and that puts a wrap on the August 2024 Market Action Report. Thanks for joining me. It’s time for me to get back to the markets.
And that action starts, NOW!