Hope all is well with you. Each of the major U.S. indexes climbed around 2% for the week as stocks extended the previous week’s positive momentum. The S&P 500, the NASDAQ, and the Dow eclipsed record highs set early this month. This week, the health and human services (HHS) secretary, RFK Jr. is issuing guidance encouraging Americans to eat more saturated fats. I have broken down this week’s update using popular menu items with the highest saturated fat content.
Cheesecake Factory Breakfast Burrito
Inflation is rising at a slower pace like you would be after starting your morning with this breakfast burrito. Friday’s Consumer Price Index (CPI) report showed inflation rose at 3.0%. Most economists had expected it to be higher. Consensus forecasts came in at 3.1%. Still no real tariff impact on the end consumer, which caused stocks to rally Friday. The government shutdown continues to delay most economic releases. The reason we got an inflation report is because it was required to meet a statutory deadline involving benefit payments tied to inflation. Lower than expected inflation increases the prospects of further rate cuts by the Federal Reserve.
Red Lobster Admiral’s Feast
We are approaching the midpoint of earnings season which means it’s time to hear from a platter of the biggest and best tech companies. Once again, U.S. mega-cap technology stocks are expected to continue generating a disproportionate share of overall earnings growth. Analysts expected that the group of stocks known as the Magnificent Seven (Microsoft, Apple, Alphabet, Meta, Tesla, Nvidia, Amazon) to generate average third-quarter growth of 14.9%,. In contrast, the other 493 companies in the S&P 500 were projected to produce growth of 6.7%. Despite the lofty expectations every quarter the mega cap tech stocks have continually beat expectations. Another beat this quarter could start the next leg higher for stocks.
Friendly’s Hunka Chunka Peanut Butter Fudge Lava Cake
What would a birthday be without a little bit of cake? The bull market turned 3 years old this week. Since the October 2022 low, the S&P 500 has gained 90%, or 98% if you include dividends. Quite the run. Contrary to the doom and gloom in the media, this is a normal bull market. It isn’t an outlier in terms of strength or length. Looking back over the past 80 years, the 12 prior bull markets averaged a gain of about 200% and lasted five years. Notably, two thirds of those (8 or the 12) made it past the three-year mark. The longest bull market (2009 to 2020) was struck down swiftly by Covid. Covid was an outlier. As bull markets usually end from recessions or Federal Reserve tightening. Neither of those scenarios appear likely in the next year, although I do think the appointment of Federal Reserve Chair Powell’s successor in May of next year could create a drop. Even if that occurs I don’t think it would be big enough to end this bull market. So my advice holds, deploy money into stocks on any dips in the market.
Please use my calendar link below and schedule a phone or zoom appointment. The calendar link allows you to schedule a call as early as the next day. If it has been a while since your last review, please schedule. Please also note that because this is a busy time, calls and emails may take longer to respond to. The calendar link has a 15 minute appointment option. If it is something you need done promptly it is best to schedule a 15 minute appointment.
