Happy Fourth of July week! Many offices, including ours, will be closed on Friday to celebrate the holiday. Get to the grocery store early to pick up the hotdogs you’ll need for your cookout – because nothing says happy birthday America like standing over a hot grill in the middle of a heat wave. Mmm, hot dogs.
But first, stocks! Last week saw the Standard & Poor’s 500 fall about 2%, while the Nasdaq Composite Index fell 4.6%. The Dow Jones Industrials gained 0.6% for the week. What happened? Well, the first thing is that tech stocks fell in price as some companies decided to pass along rate hikes (in the price of tech components) to consumers. Among other companies, Apple and Microsoft announced that they were raising prices on laptops, smartphones, and other devices.
We know that there is a shortage of chips (the processing kind, not the tasty kind). That’s why chip manufacturers are doing so well. And we know that AI companies are set to build data centers that will suck up the chips AND the clean water. Scarcity drives prices higher, but higher prices can cause a dip in demand. It’s complicated, and we’re watching it. Well, everyone is watching it.
The S&P and the Nasdaq are more subject to tech stock moves than is the Dow Industrial Average, which is less tech heavy. But it’s working to catch up, as today the Dow swapped out Verizon stock in favor of Alphabet – the parent company of Google. Serious investors watch the movements of the S&P and, to a lesser extent, the Nasdaq. The Dow remains almost an afterthought. But it still serves to reflect when value stocks are doing better than growth (usually tech) stocks.
And as for one particular stock, SpaceX, it fell in price four out of five trading days last week. Although SpaceX originally went public at $135 per share, Morningstar evaluated it as worth more like $63. But then it traded up, and then down, and today is trading around $155 per share. Stockholders in Elon Musk-related companies are generally fans of his, and may feel sorry for the man who was, for a brief minute, a trillionaire.
But Musk has gone further than issuing stock in SpaceX. Following his successful IPO, he announced that he was also going to sell $25 billion in SpaceX bonds. The bonds were released at a slight premium to Treasurys but began to fall in price (raising their yields) as investors decided the bonds were too expensive given their speculative quality.
We received an updated personal-consumption expenditure index reading last week, which showed that consumer prices rose 4.1% over the trailing-twelve months ending in May. This is more than double the Federal Reserve’s 2% inflation target and would normally indicate that the Fed would raise interest rates to tamp down inflation. But there’s a new sheriff in town, and Kevin Warsh is going to be reluctant to raise rates after campaigning for his new job with the idea that he would cut rates. He’s now being pulled in two directions by what the economy needs and what the Administration wants. The next Fed Open Market Committee meeting is at the end of July.
The U.S. Congress managed to pass a bipartisan housing bill which would limit the number of homes a corporate buyer could accumulate – potentially leaving more homes for actual people to buy. But the Administration cancelled the signing of the bill at the last minute. Still, it has not been vetoed, and if that remains true, the bill will go into effect 10 days (not including Sundays) after it reached the president’s desk.
Last year, people in America donated $19.2 billion in what are called megagifts to charities. One third of these gifts were donated by Jeff Bezos’s ex-wife MacKenzie Scott. Her total giving for the year equaled about $7 billion dollars. She was followed by Michael Bloomberg, Bill Gates, and Warren Buffett. Scott’s giving over the past five years has exceeded $26 billion, although her Amazon-based fortune is still worth almost $35 billion.
For the week ending on June 26th, the S&P finished at 7,414, the Nasdaq at 25,641, and the Dow at 52,214. The yield on the ten-year Treasury Note closed at 4.39%. U.S. WTI crude oil cost $69.95 per barrel, New York gold cost $4,050.80 per ounce, and one Euro was worth $1.14.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Barron’s, Yahoo Finance, The Wall Street Journal, Morning Brew, Axios, Bloomberg, CNN, Business insider, Reuters, CNBC, NBC, The AP, The Washington Post, USA Today, Fortune, and The Hustle. If you have questions about anything you’ve read here, please call Diastole at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com.
Living in New York City and unable to afford even the average rent of about $3,600 per month? No problem! The solution is convents! Nuns in the city are renting out their spare rooms to young men (on separate floors) and young women. The cost is about $800 to $1600 per month, payable weekly, and other rules apply. Curfews, chores, and communal eating are some of the restrictions and advantages. I’ve seen Sister Act, I know nuns can be a good time.