Market Drama
Featuring Zoe CEO & Founder, Andres Garcia-Amaya, CFA
- Welcome to this week’s Market Drama!
Stock Market Updates:
- S&P 500 was down 2% for the week.
- Nasdaq was down even more, 3.6% for the week.
- Dow Jones was up 0.7%, and the Russell 2000 was up even more, 7.7% over the last two weeks.
- Russell 2000 (a much broader set of stocks) has a smaller cap tilt than the S&P 500 or Nasdaq.
- Its increase indicates a rotation in the markets towards a potential interest rate cut later this year.
Economic Updates:
- Retail Sales jumped 0.8% in June, well above consensus and the most since January 2023.
- Retail sales remain strong, a great indicator of economic health since consumption represents 68% of GDP.
- Inflation is coming down, the Fed is now looking to cut interest rates, and the economy is holding up.
- This has led to a rotation in the markets towards small cap stocks and more value stocks (financial and industrial sectors) that tend to have more cyclical tilts to the economy.
- There was a shift in expectations for former President Trump to win the election, and the markets reacted to adjust to that.
- Former President Trump has had pro-growth policies such as lower corporate tax rates and lower regulation for financials.
- New market leadership of small-cap and value shares vs. the larger mega-cap stocks in the growth sector (tech).
Coming Up Next Week:
- Initial 2nd quarter GDP.
- PCE inflation data from June.
Stay tuned for next week.
– Andres
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