Wednesday, July 1, 2024

This week's insights from Simplicity Wealth's

Thomas Rozman, CFA, CAIA | Partner & Chief Investment Officer

Matthew Opsal | Senior Manager Research Analyst

Week In Review

Financial market activity was generally stagnant all week, as participants waited patiently on a key inflation report that arrived on Friday morning. The release of the core personal expenditures price index for the month of May depicted no change in consumer prices and brought the twelvemonth increase to just 2.6%. The Fed’s preferred inflation number is still above their 2% target, but the positive trend could provide a data dependent voting committee with enough confidence to accelerate the timing of interest rate reductions. Market sentiment welcomed the favorable inflation news. Despite the S&P 500 declining -0.1% for the week due to concerns regarding narrow market leadership and valuation levels of technology companies focused on artificial intelligence, the index still finished the first half of the year with a monumental +14.5% increase.

This Week

The U.S. financial markets close early on Wednesday and are closed all day on Thursday due to the Independence Day holiday. Nonetheless, market observers will have plenty of economic data to peruse, including the minutes of the Fed's June FOMC meeting and a roster of labor market data that includes the non-farm payrolls and unemployment rate reports.

Portfolio Themes

Stock market performance is driven by valuation and growth in earnings. Earnings growth is under constant scrutiny. The advance of the S&P 500 this year has been led by stellar corporate profits and earnings upgrades primarily in the technology sector. Notwithstanding those gains, semiconductor companies focused on artificial intelligence continue to see outsized increases in future earnings growth estimates. Simplicity offers model portfolios that opportunistically rotate sector exposures based on the business cycle and changes in forecasted earnings. The active management approach pursued by firms like Invesco and WestEnd may help position portfolios for more adaptable investment performance.

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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from Morningstar Direct. Portfolio Themes chart sourced from State Street Global Advisors.

1Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.

2 Index Statistics: P/E TTM – Calculated by dividing an investment’s price by the trailing 12-month earnings per share value. Yield – Expected dividend-per-share divided by current share price. Table statistics are updated monthly. MSCI indices represent broad global and international equity markets. Indices are typically not available for direct investment, are unmanaged, and do not incur fees or expenses. Past performance does not guarantee future results. Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.