Your Monthly Market Newsletter

June is here, bringing a wave of optimism for investors after strong first-quarter earnings, which helped ease investors’ fears over slowing economic growth and continuing inflation. The S&P 500 gained 4.9% in May, and investors hope the momentum will continue into the summer. Additionally, inflation seems to be moderating. In April, the core Consumer Price Index (CPI) rose 0.3%, slightly less than the 0.4% growth in recent months. Core inflation rose to 3.6% year-over-year, down from 3.8% in March, marking its lowest level in three years. As a primary indicator of inflation, the latest CPI indicates inflation is cooling, albeit slowly.

Investors are also keeping an eye on a softening labor market and weakening consumer spending. Although a slowing economy will increase the likelihood the Federal Reserve will cut interest rates, there is concern that if the economy slows too much, the U.S. could potentially enter a recession. In his remarks at a Federal Open Market Committee (FOMC) meeting in May, Fed Chair Jerome Powell said the Fed will need to remain patient in holding interest rates at current levels until it is confident inflation is declining.

June is not just the first month of summer; it's also National Safety Month, a time to raise awareness on preventing injury and death in the workplace, on the road, at home, and in our communities. Prioritizing safety can keep you healthier, help prevent accidents, and reduce the chances of dealing with the financial impacts of a loss or injury. 

• Prepare for emergencies. Hold natural disaster and fire drills with children and employees so they know what to do in an emergency.
• Expect the Unexpected. Have first aid kits available for your home, car, and office. Enroll yourself, your family, and your employees in CPR and self-defense classes.  
• Take preventative action. Review your home and office for any potential accident hazards. Ensure medications, paints, detergents, and chemicals are properly stored to avoid possible misuse and poisoning. At least annually, test all smoke and carbon monoxide detectors in your home and office. Have your HVAC system and water heater professionally serviced to prevent carbon monoxide leaks.

Nothing is more important than the safety of your loved ones and employees; planning can make all the difference. Taking the precautions above can help mitigate tragedies and make your life less stressful.

As we approach mid-year, now is the perfect time to take stock of your financial situation. A mid-year review can help you determine whether you're making appropriate progress and uncover any need for adjustments. You'll also want to revisit your budget and savings and consider any recent life changes that may impact your financial needs. As you're evaluating your finances, if you're in need of financial guidance, just give us a call.  We'd be happy to work with you on a plan to help you feel better about your finances. Have a great summer!

Stocks

The saying “April showers bring May flowers” proved true, with equity markets rebounding from last month’s selloff. All three major U.S. equity indices finished May over 2.5%, with the tech-dominated NASDAQ leading the group. A single equity, AI-leading technology company Nvidia, significantly influenced the S&P 500 and NASDAQ’s gains. The culmination of a strong earnings season has helped boost investor confidence.

Sector Performance

Ten of the eleven sectors of the S&P 500 ended positive for the month. Technology led the way, climbing over 10% as Nvidia and a few other large technology companies dominated earnings reports. Both Utilities and Communication Services showed strong results in May as investors recognized that the increasing use of artificial intelligence drives growth in each sector. The worst-performing sector was Energy, which continues to be hurt by falling oil prices. This month, it was the only sector with negative returns, declining -0.39%. With interest rates decreasing, the real estate sector showed some improvement but remained down nearly 5% for the year.

Bonds

Fixed income found some relief in May, with yields dipping slightly throughout the month. Rates, inversely related to bond prices, fell due to modest inflation data and the Fed’s decision to hold interest rates for the time being. The 10-year treasury yield fell 18 bps, and the yield on the 2-year fell 16 bps. With the fall in interest rates, longer-duration bonds beat their short-duration counterparts in price return, a potential harbinger of rate moves.

Economic Update

The Personal Consumption Expenditures Price Index (PCE) stopped trending upward and remained stagnant in both the headline and core (both exclude food and energy measures). As the Fed’s preferred gauge for inflation, moderation was welcomed. Gross Domestic Product (GDP) for the first quarter of 2024 was revised downward to an annualized rate of 1.3%, implying that the economy continues to expand but has slowed. The recently released Home Price Index showed that prices increased 0.1% month-to-month, but 6.7% compared to this point last year. Housing is the most significant portion of the Consumer Price Index (CPI) and has contributed to higher inflation in recent years.

Mobile Hospital Provides Swift Assistance During Disasters

Getting help to those who need it can be a challenge in times of disaster. An initiative in India called “Project BHISHM”—Bharat Health Initiative for Sahyog Hita and Maitri—launched a mobile hospital that can be quickly deployed in emergencies. This mobile hospital, the BHISHM Cube, can be operational within minutes and treat up to 200 patients.

Each waterproof cube carries solar-powered medical equipment, including x-ray machines and ventilators, and provisions to treat a wide range of injuries. The robust cubes, made up of 72 lightweight components, can be carried or distributed by drone, adapting to the needs of the situation. This adaptability ensures that the BHISHM Cube is always ready to provide the necessary medical care, regardless of the circumstances.

The Indian Air Force recently tested deploying a cube, and the mobile hospital was fully operational within 12 minutes of being airdropped. These cubes not only enhance India’s ability to respond to disasters within its borders but can also provide aid to other countries in times of need.

For more information about this initiative, read this article.

THOUGHT FOR THE MONTH

^{Index Definitions}

^{Dow Jones Industrial Average:The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.}

^{Dow Jones U.S. Real Estate Total Return Index:The index is designed to track the performance of real estate investment trusts (REIT) and other companies that invest directly or indirectly in real estate through development, management, or ownership, including property agencies.}

^{NASDAQ Composite:The NASDAQ Composite is a market-cap weighted index of all issues listed on the Nasdaq stock exchange. It is heavily weighted towards the technology sector.} 

^{S&P 500 Bond Index:The S&P 500® Bond Index is designed to be a corporate-bond counterpart to the S&P 500, which is widely regarded as the best single gauge of large-cap U.S. equities. Market value-weighted, the index seeks to measure the performance of U.S. corporate debt issued by constituents in the iconic S&P 500.}

^{S&P 500 Consumer Discretionary:The S&P 500® Consumer Discretionary comprises those companies included in the S&P 500 that are classified as members of the GICS® consumer discretionary sector.}

^{S&P 500 Consumer Staples:The S&P 500® Consumer Staples comprises those companies included in the S&P 500 that are classified as members of the GICS® consumer staples sector.}

^{S&P 500 Energy:The S&P 500® Energy comprises those companies included in the S&P 500 that are classified as members of the GICS® energy sector.}

^{S&P 500 Financials:The S&P 500® Financials comprises those companies included in the S&P 500 that are classified as members of the GICS® financials sector.}

^{S&P 500 Index:The S&P 500® index is a market-cap weighted index of the largest 500 companies headquartered in the United States. The index covers approximately 80% of available market capitalization.}

^{S&P 500 Utilities:The S&P 500® Utilities comprises those companies included in the S&P 500 that are classified as members of the GICS® utilities sector.}

^{S&P U.S. Aggregate Bond Index:The S&P U.S. Aggregate Bond Index is designed to measure the performance of publicly issued U.S. dollar denominated investment-grade debt. The index is part of the S&P AggregateTM Bond Index family and includes U.S. treasuries, quasi-governments, corporates, taxable municipal bonds, foreign agency, supranational, federal agency, and non-U.S. debentures, covered bonds, and residential mortgage pass-throughs.}

^{S&P U.S. Treasury Bond Index:The S&P U.S. Treasury Bond Index is a broad, comprehensive, market-value weighted index that seeks to measure the performance of the U.S. Treasury Bond market.}

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^{A portion of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.}

^{Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance cannot guarantee future results.} 

^{Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect again loss. In general, the bond market is volatile; bond prices rise when interest rates fall and vice versa. This effect is usually pronounced for longer-term securities. Any fixed-income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. Vehicles that invest in lower-rated debt securities (commonly referred to as junk bonds or high-yield bonds) involve additional risks because of the lower credit quality of the securities in the portfolio. International investing involves special risks not present with U.S. investments due to factors such as increased volatility, currency fluctuation, and differences in auditing and other financial standards. These risks can be accentuated in emerging markets.}

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