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Investment Commentary

July 8, 2024 – Investment Commentary

July 8, 2024

Market Moves

Last week, the S&P 500 kicked off the second half of 2024 with its best weekly performance since late April. The advance was driven by labor market data that has supported the case for Federal Reserve interest rate cuts; some dovish commentary from Fed Chair Powell, minutes of the central bank's last monetary policy meeting; and the S&P 500 was helped by Tesla’s stock up over 25% during the last week and 40% over the last month. As measured by Russell 1000 indexes, growth shares outperformed value stocks by 415 basis points (4.15 percentage points), while the small- and mid-cap benchmarks recorded losses. Powell’s comments and the week’s economic data appeared to drive a decline in long-term U.S. Treasury yields over the week to 4.28% (Bond prices and yields move in opposite directions).

More surprising may have been a sharp downturn in the ISM’s gauge of current services sector activity, reported last Wednesday, which declined a full five points into contraction territory, from 53.8 in May to 48.8 in June—its lowest level since soon after the start of the pandemic lockdowns in early 2020.

Potential Market Moving Catalysts

For the week, the S&P added +2%, while the tech-heavy Nasdaq Composite gained +3.5% while Non-US developed market beat the S&P coming in at 2.7% and Emerging Markets tied the S&P 500.

Fed vs. Fundamental catalysts

We believe expectations for lower interest rates due to signs of weakening growth and easing inflation pressures are a factor in favoring growth stocks by placing a lower implied discount on future earnings. The week ahead will be dominated by consumer inflation data and jobless claims that are likely to confirm that the economy is in a disinflationary soft patch consistent with the data released last month – all of this comes before the Fed meets at the end of the month.

We also expect corporate earnings will likely influence markets. As we know, the broader market continues to rally, but concerns about the breadth of the rally and valuation of the top stocks remain.

Beyond Big Tech, leading earnings this week are the banking stocks. All 31 systemically important financial institutions (SIFI) or major banks just passed their Fed stress tests. Friday brings reports from JPMorgan Chase, Wells Fargo and others. The Investment Office will be focused on the guidance and perspectives on the consumer, commercial real estate and corporate loan delinquency trends.

Investment Commentary Sources: Bloomberg. Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any Investment decisions. The information contained herein was carefully compiled from sources believed to be reliable, but Robertson Stephens cannot guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. Past performance does not guarantee future results. Forward-looking performance targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are only available to qualified investors and are not suitable for all investors. Alternative investments include risks such as illiquidity, long time horizons, reduced transparency, and significant loss of principal. This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2024 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere.