Monday, July 22, 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

Market volatility spiked as investors rotated out of the highly acclaimed information technology sector in favor of interest sensitive and defensive sectors that may benefit from future rate cuts and a slowing economy. Since the ten largest market-cap stocks in the S&P 500 are largely technology-related companies and comprise a whopping 37% of the index at the end of the second quarter, it’s not surprising the performance of the benchmark suffered as well.3 Capital flows enhanced the underlying breadth of the stock market, but the profit-taking in mega-cap momentum stocks drove the S&P 500 to its poorest finish since April, down -1.97%.4

This Week

The financial markets have a short respite from the barrage of economic reports, but the few announcements that are made will be meaningful. Market observers will receive preliminary estimates of both the services and manufacturing PMI surveys, with those indicators of economic conditions serving as a prelude to the release of the second quarter GDP. Still, that news will take a backseat to the headline assessment of inflation. The Personal Consumption Expenditures price index for the month of June will be delivered on Friday and could strengthen the likelihood of a forecasted rate cut in September if inflation continues to decelerate.

Portfolio Themes

Many investors have an emotional relationship with money. Combine that fervor with a presidential election, social engagement platforms and constant media hype and you have a prescription for amplifying anxiety. Yet, reassurance can be found in the historical record. A review of election cycles since 1932 provides compelling evidence that stock market performance is more dependent on time in the market rather than timing the market. Overreacting to election outcomes and sitting on the sidelines is harmful to investment performance. Simplicity offers curated model portfolios that may help clients stay the course in an election year.

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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from Morningstar Direct. Portfolio Themes chart sourced from Capital Group. Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums. 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. 3J.P. Morgan Asset Management. 4CNBC.

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.