MARKET RECAP

• US stocks were flat for the week, although the Nasdaq managed a 1.4% advance, helped by blockbuster earnings by Nvdia. The Dow fell by 2.33%.
• The Dow had its worst day of the year on Thursday, falling 600 points, on inflation worries after solid numbers in a manufacturing survey. The index closed below the 40,000 mark at 39,069.
• Target fell 8% on Wednesday as sales declined for the fourth quarter, but TJ Maxx and Ross have had positive reports.
• Earnings estimates have been rising; the SPX is expected to show an 11% increase in 2024 and 14% in 2025.

NVIDIA

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MARKET RECAP

• US stocks +1.65%, international +1.90%, bonds +0.55%.
• Indexes closed at records this week as the rally continued, as investors are hoping that interest rate cuts later in the year are back on the board, given that US inflation eased slightly from April’s pace and that the economy might be softening a bit.
• PPI numbers were higher than expected, but CPI numbers were lower.
• The Dow broke another milestone, closing just above 40,000. See the chart below.

DOW CLOSES ABOVE 40,000

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MARKET RECAP

• US stocks +1.78%, international stocks +1.09%, bonds +0.23%.
• Stocks are back to within about 1% of highs while consumer confidence is falling. The University of Michigan consumer sentiment survey is at a six-month low.
• Earnings estimates have ramped up in the last few weeks; see the chart below.
• GDPNow estimates Q2 growth to be at a strong 4.20%.
• Talk of a recession seems to be receding on earnings calls. Meanwhile, the “10% recession rule” followed by Piper Sandler was triggered last week. The rule is triggered when the three-month moving average of people unemployed rises 10% compared with its level from the prior year.
• Social Security is forecast to run out of funds in 2033, and benefits will drop by 21%, assuming no fix.

EARNING ESTIMATES OVER TIME

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MARKET RECAP

• Last week, the Treasury auctioned off $213 billion in bonds. According to Grant’s Interest Rate Observer, that amount is greater than the entire deficit for fiscal y ear 2007 ($160.7 billion). And our leaders continue to ignore this problem.

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