In Markets "In a Nutshell"

Markets “In a Nutshell” for June 3, 2024

Investment Week at a Glance

Stocks finished lower for the week. The Dow Jones Industrial Average fell 1.00%, the S&P 500 was down 0.50%, and the NASDAQ fell 1.10%. Foreign stocks (MSCI EAFE) were also down, falling 0.80%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.50%.  (Data source: Wall Street Journal)

Volatility Remains Low

The market moved lower last week but so far this year, volatility has not been an issue for this bull market. 5 months into the year the largest pullback we have seen was 5.5%, if that holds as the largest pullback throughout the year, it will be the 5th smallest pullback in a year since 1984. This is somewhat surprising as there have been many headlines that could have caused a larger pullback such as rising geopolitical tensions in the Middle East, inflation readings being higher than expected, and the Fed pushing back the timeline of rate cuts. Despite all these, the market has been able to move higher and made all-time highs throughout the year. The market has also only had one day of a 2% move, far below the average of the past 6 years of 21 daily moves of 2%. Investors remain hopeful this market will remain calm in the coming months and continue to move higher.

Market Broadening Continues

From January 2023 to February 2024, market gains were driven by tech and communication services each up over 70%. The big laggard of the market was utilities, the only negative sector being down 9% over that timeframe. Now looking at the past 3 months’ returns, utilities have led the way being up over 16%, the best-performing sector. Another sector that was lagging was energy being up only 1% from January 2023 to February 2024. Over the past 3 months, however, energy is the 3rd best sector rising 7%. This has been good news for markets as when more sectors become a part of a bull market, the stronger the market tends to be. When one or two sectors carry all the gains, it does leave the market vulnerable if those sectors begin to decline. We could see this trend continue throughout the year as the laggards still have room to catch up to the high-flying sectors of the past 18 months.

Quiz:

How many sectors are in the S&P 500? (Scroll Down for Answer)

  1.     7
  2.     11
  3.     14
  4.     19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer:

2.    11. There are 11 sectors in the S&P 500 with each company getting put into one of the 11. Those 11 sectors are, Information Technology, Health Care, Financials, Consumer Discretionary, Communication Services, Industrials, Consumer Staples, Energy, Utilities, Real Estate, and Materials.