Author: Zac Martin, Senior Investment Analyst
Week Ending June 5th – Modern Marvell
Volatile start to June, and the first weekly loss since March which has snapped the 9-week win streak. Notable price movement, both up and down, from MRVL after NVDA CEO Jensen Huang claimed they were the “next trillion-dollar company.” Markets on Friday remained bifurcated, with semiconductors leading market losses, while the equal weight index outperformed by 116bps. Another notable point to Friday’s market move is that all sectors outperformed the S&P 500, except Tech. This move highlights the impact that market concentration could have on returns if the AI story begins to wane. Our CIO, David Templeton, CFA, recently wrote more in depth about this concentration and what it may mean for markets moving forward. Link here, for those that have not had the opportunity to read through it.
The Employment Situation: One factor that might have contributed to Friday’s route was the Nonfarm Payrolls and Unemployment report. Nonfarm Payrolls were more than double analyst’s expectations, reporting 172K v. the expected 72K. Additionally, the previous month’s revisions were substantially higher with April and March now reporting 179K & 214K, respectively. While this was one of the stronger reports we’ve seen over the past year, one may think it’s odd that the market retreated lower from this news. It appears the market may be re-entering into a “good news = bad news” environment. The reason has to do with the expectations of rate cuts/hikes at the Federal Reserve. Following the report on Friday, probabilities of a rate increase moved higher with the market now expecting a rate hike before the end of the year. Higher interest rates can be a potential headwind for both the economy and the stock market.
The Week Ahead:
- Consumer Price Index (6/10)
- Producer Price Index (6/11)
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