Stocks Exhibit Strong Gains; Bonds Also Up

Good morning,

What a wonderful week we had last week, with green across the screen!  The Dow (+2.6%), NASDAQ (+6.0%) and S&P 500 (+4.1%) posted strong gains, and mostly erased the losses from the prior week.  Meanwhile, taxable bonds gained 0.5% and tax-free municipal bonds gained 0.2%.  The 10-year Treasury yield fell 0.06% to finish the week at 3.66%.  The inverted yield curve we have experienced for nearly two years has also reverted back to “normal” for the second straight week.

Tech stocks soared last week, as they gained over 7%.  Chip stocks led the way, with Nvidia and Broadcom gaining 16% and 22%, respectively.  It wasn’t limited to just tech stocks, though.  The rally was very broad-based, demonstrating that investors were willing to buy the dip from the prior week.

All eyes will be on the Fed this week, as the highly anticipated Fed meeting will likely result in an interest rate cut of 0.25% or 0.5% on Wednesday.  The Fed continues to weigh inflation data and the job / labor market.  The recent flurry of data has been mixed, suggesting the Fed may only cut rates by 0.25%.  Two inflation gauges were reported last week that were fairly tame, but core inflation was slightly above economists’ expectations.  While inflation has been coming down, it still remains above the Fed’s desired rate of 2%.  See the chart below that shows the Consumer Price Index (CPI) rates since the beginning of 2021.

Have a great day and terrific week.

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.}

^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}