Hello Investors,
Welcome to another weekly update. I’ve received some feedback over the last few weeks that these weekly letters are too lengthy, so starting this week I am experimenting with a shorter format, similar to other newsletters.
Each section is pared down to just key market moves and what investors need to know, without the long-winded “investment thesis write ups” for each section.
I am also removing the following sections for now, as I am not sure how much real value readers get from them: Gold, Silver, Copper, Bitcoin, Earnings & Data.
As always, my goal is to create content that you will find interesting and valuable, and I am always open to experimenting with new formats. If I left something out that you would like to see back, or anything else you have in mind, let me know!
Now, on to the update!
-Brian
By the Numbers
Equities
Stocks had a good week with all three major indexes in the green. The S&P 500 rose 0.49% while the tech-heavy rose 0.85%. The Dow was between the two, up 0.53% for the week.
The gains mostly came from a few large cap tech companies, shown in green in the chart below. Meta, Microsoft, Apple, Nvidia, and Amazon led the market, with a bright spot in financial services, while the rest of the market was in the red.
This goes to show the influence that large cap technology companies have on the rest of the market. As of this writing, the top 10 stocks in the S&P 500 make up 40% of the index. And since many of these top companies are heavily invested in Artifical Intelligence, their stock tends to fluctuate based on the latest headlines around AI, and they take the rest of the market with them. If it’s a good week for AI, it’s a good week for the S&P 500, and vice versa.
Interest Rates
Interest rates were flat compared to last week, with the 10-Year Treasury Yield at 4.73% compared to 4.74% a week ago.
Interest rates have continued higher throughout the year, raising costs for consumers across all types of loans such as mortgages. As of this writing, rates on 30-year mortgage are at 6.66% while the median home in the US sits at $410,000, not far off from all time highs.
The latest news driving interest rates higher came from Kevin Warsh, the Chairman of the Federal Reserve. In a speech given at a conference in Jackson Hole, Wyoming, Warsh reiterated that inflation remains above the Federal Reserve’s target, and that the committee will deliver price stability. In other words, interest rates may be higher for longer as the Fed signals more interest rate hikes are on the way.
Commodities
Crude Oil fell to $83.53/barrel, down 4.05% from the prior week, and is listed at $83.44 as of this writing on Saturday (figure shown in screenshot). Oil prices are up 45.6% YTD and have stayed elevated as the War between the US and Iran has continued to drag on.
High oil prices remain a pain point for US consumers, with national gas prices currently at $4.09. Prices at the pump are now higher than any of the prior 4 years including the last cycle of inflation which reached as high as 9%.
That’s all I have for you this week, if you have any questions, suggestions, or just want to chat about the market, feel free to email me at brian@pinecreek.capital.
Best,
Brian