Tech Stocks Fall But Markets up on Fed Comments; Bonds Up

Good morning,

The Dow (+1.5%), NASDAQ (-0.6%), and S&P 500 (+0.3%) were mixed last week.  Meanwhile, taxable bonds were up about 0.4% and tax-free municipal bonds were virtually unchanged.  The 10-year Treasury fell 0.06% to finish the week at 4.26%.

A lousy week in the markets quickly changed on Friday, as most indices jumped almost 2% to erase most of the losses seen earlier in the week.  The week started off to the down side, as two separate companies spoke of the AI-related stocks being overvalued, causing pressure on the Magnificent Seven stocks that have been leading the markets for the past 2 – 3 years.  While Friday’s sharp rise elevated all the market indices, it wasn’t enough to pull the tech-heavy NASDAQ into positive territory.  The move on Friday was a direct result of a speech by Fed Chairman Jerome Powell who gave dovish comments, indicating that the chance of an interest rate cut in September is more likely.

So, while the economic data continues to show some signs of inflationary pressure due to tariffs, it seems that the extent is somewhat unclear.  The data also shows that the economy is weakening, but not enough to cause us to go into a recession.  Thus, the Fed continues to be torn between its two mandates – inflation and the job market.  Regardless, it seems that the markets tend to be responding more toward speculating on the Fed commentary of if rates, when, and by how much it will cut interest rates, rather than the underlying data itself.  I personally find that a little frustrating, but they forgot to ask for my opinion!

Have a great day and terrific week!

^{Source:  Yahoo Finance}

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^{The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.}