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Market Rotation Deepens

  • Writer: Scott Poore, AIF, AWMA, APMA
    Scott Poore, AIF, AWMA, APMA
  • Jul 29, 2024
  • 2 min read



Investors continued to rotate away from momentum names into Small Caps, Mid-caps and "value" names last week.

More than a third of S&P 500 companies report 2nd quarter earnings this week and so far, reports have been solid. Overall, 78% of S&P companies have beat earnings estimates, which is above the 5-year average of 77%. The Fed meets this week to determine the future course of interest rates. Inflation came in as expected last week with the PCE Index up only 0.1%, which was actually lower on a year-over-year basis. This has provided renewed expectations of an initial rate cut at next month’s Fed meeting.


Second quarter GDP came in at +2.8%, above expectations.

So far, the soft-landing theory seems to have plenty of merit. Meanwhile, the market has been experiencing a reversion to the mean when it comes to over-valued tech names. The first 2% correction in a single day occurred last week. However, we’ve only had 9 down days of greater than 1% this year. In similar years, markets have finished higher by year-end. Expect some volatility this week as markets anticipate a change in the Fed’s language pointing to future rate cuts.

 

Disclosures


The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.


Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.


Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.


Past Performance does not guarantee future results.

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