More New Highs

June 28, 2024

Summer tends to be a good time for stocks with all 3 of the summer months historically showing gains.  With that said, coming into June the S&P 500 was already more than 10% higher on the year and valuations were well above historic norms.  Thus far in 2024 the market has been dominated by gains in large cap tech and we wondered if those gains would spread to other sectors.  The heightened level of interest rates has been one of the few concerns this year and we began June with interest rates moving lower, which was greeted with a move higher in stocks.  Large cap technology stocks continued to lead the market higher while other sectors continued to lag.  We need to see the rally extend into other areas of the market for the advance to continue.  With the help of large cap tech, it was another good month for the S&P 500 which gained 3.5% and is now 14.5% higher on the year.  However, the more representative equal weighted S&P continues to lag with a year-to-date gain of just 4.1%.  Oil prices rebounded from the May selling gaining 1% this month and are now 13.8% higher on the year.  Interest rates are edging lower with the 10-year Treasury, at 5% just a few months ago, ending the month at 4.8%.  Gold was .5% lower in June but is still 12.4% higher on the year.

The month began with interest rates and oil prices both moving lower on the back of reports showing a slowing economy and slowing inflation. At the end of the week, we were surprised to see 272,000 new jobs created in May, which was well above the 190,000 expected.  Illegal immigrants are skewing this number so the market did not react as negatively as one might have expected.  At the end of the week the S&P 500 had gained 1.3%.  The focus during the second week was the CPI report that showed inflation declined month over month for the first time since January and that sent interest rates to a 3-month low.  It was otherwise a quiet summer week of trading with the S&P 500 ending the week another 1.6% higher.  The third week was shortened by the 4^th Juneteenth National Holiday on Wednesday.  The first two days of the week saw the S&P 500 move higher, hitting 5500 for the first time in history, but the last 2 days the market edge lower.  Trading volume was lower due to the mid-week holiday, but the S&P 500 gained another .6%.  The final week saw some of the much desired “widening out” of the rally with profit taking in tech stocks being redeployed to the industrial sector. We learned the Federal Reserve’s favorite inflation gauge advanced at the slowest pace in over 3 years, but at the end of the week the S&P 500 had lost .1% for its only down week during the entire month of June.

As mentioned earlier, summer tends to be a good period for stocks with July historically being the best month of the year.  In fact, July has on average been 20% better than April which traditionally has been the second-best month.  With that said, April has thus far been the only month this year that ended in the red, so history is simply a guide, not an absolute.  Market valuations are well above historic norms, so a period of profit taking can come at any time.  Market participants continue to be emboldened by the prospect for corporate profits from artificial intelligence and the belief that interest rates are done moving higher.  There is always the possibility of some unexpected headline making news, but barring that, the path of least resistance, despite multiple new all-time highs already this year, appears to be higher with the buy the dip mentality dominating trading.

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.