I hope everyone had a great 4th of July and enjoyed some fireworks!
MARKET WATCH
This time of the year is at least partially known for the numerous displays of fireworks celebrating our nation’s birthday. However, this year, just prior to the close of the markets for the first half of 2024, a different type of fireworks were ignited by the debate between Joe Biden and Donald Trump. Having watched the display from start to finish, the grand finale happened after the presidential candidates were gone from the stage, and the CNN pundits were in panic mode regarding President Biden’s performance and his apparent frailty. So, once again, Happy Birthday America! I do hope your Independence Day was safe and enjoyable.
There have been fireworks in the markets for the first half of the year as well, with the advances we’ve begun to see in the realm of artificial intelligence (AI). This has caused a run-up in the S&P 500* due to Nvidia’s (NVDA) outsized gains. Their chips, called graphic processing units, are a necessary component in the data centers needed to service AI. While a handful of tech companies are driving the gains in this market, we all benefit from their success because most growth funds and tech funds own these companies. However, even though we are hopefully in the early stages of this bull market, I’d like to see more companies participating in this stock market rally, and I think we will.
In the spring newsletter I discussed the fact that there had been no down days in the markets of 2 percent or more from November through March, and that the rally was beginning to benefit smaller companies. Throughout the spring, we began to have some drops in the markets of 2 percent or more and even had a 5 percent pullback. While these movements are healthy for markets, the 5 percent pullback also wiped out the increase in small cap stocks for the year. We also know all to well that a correction of 10 percent or more is a healthy possibility in a bull market and could come at any time, especially with the upcoming Presidential election this fall.
But for now, we can enjoy the fact that for the first half of the year the markets have been favorable, even if not all sectors of the economy and segments of the market benefitted equally. As you might have guessed, the NASDAQ* was the best performing index for the first half of 2024 closing at 17,732.60 and up 18.21 percent year to date (YTD). The S&P 500* ended the first half of the year at 5,469.30 notching a gain of 14.67 percent YTD, thirty percent of which could be attributed to Nvidia. The Dow Jones Industrial Average (DJIA)* briefly advanced above the 40,000 level before settling back to 39,118.86 by mid-year and a 3.79 percent YTD increase. As I mentioned earlier, the Russell 2000* index of smaller companies was enjoying a strong start to the year until an 8 percent swoon in April from which it hasn’t yet recovered. It closed out the first half of the year at 2,047.69 increasing just 1.03 percent YTD.
The Federal Open Markets Committee (FOMC) left interest rates on hold at 5.25-5.50 percent at their mid-June meeting as higher rates for longer is the current thinking. The inflation reports this month ticked downward after plateauing for several months during the spring. The Consumer Price Index (CPI), reported in mid-June, was 3.3 percent for the all-items index and 3.4 percent minus food and energy on an annual basis. The Producer Price Index (PPI) rose 2.2 percent for the 12 months ended in May. Minus foods, energy, and trade services, the PPI rose 3.2 percent for the 12 months ended in May. The Federal Reserves preferred measure of inflation, the Personal Consumption Expenditures Price Index (PCE), decreased less than 0.1 percent in May. From the same month one year ago, the PCE price index increased 2.6 percent and excluding food and energy, it also increased 2.6 percent. We’re getting closer to the Fed’s desired 2 percent inflation rate.
Gross Domestic Product (GDP) increased at an annual rate of 1.4 percent in the first quarter, while job growth & consumer spending slowed a little. Will summer spending be strong?
WORKING TOWARD A MORE PERFECT UNION IS A GOAL WE MUST NOT ABANDON
Two hundred and forty-eight years ago this week on the east coast of North America, representatives of thirteen British colonies set off their own fireworks display that changed the course of human history, albeit slowly, but profoundly. With these words from their Declaration of Independence, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness”, they gave birth to the United States of America.
These days, the bombardment and bloodshed of the Revolutionary War are symbolized by fireworks each Fourth of July, and the words of a young Virginian named Thomas Jefferson, who knew at the time the phrase “All men are created equal” would have far-reaching and intense consequences, were immortalized. I am not sure he would have thought it would have taken the lifetime of the republic, thus far, for that goal to become a reality. Though, I’m quite sure he thought there would be those, even today, who would disagree with the premise.
As the young republic developed and expanded from coast to coast, the utilization of slave labor as a way of life became an issue which couldn’t be ignored. Soon, a movement developed that called for the emancipation of those being held as slaves and the abolition of slavery as a practice. This took about ninety years, and of course led to the Civil War, not one of our better moments as a country. A couple of important take aways from this era are the Constitution survived, and as a country we got closer to living up to the words of Jefferson.
During the next one hundred years the country continued to develop as it moved from primarily an agrarian economy to become an industrial powerhouse. We moved from horses, buggies and steam to combustion engines, learned how to fly, realized all citizens of the country should have the right to vote, fought two world wars to help save Europe and the Pacific Islands from authoritarianism and became the most powerful country on the planet. With that came much more responsibility, expense, moral leadership and a country where Jefferson’s words were getting closer to reality.
Over the last fifty years we’ve seen technological disruption become the norm. Yet sometimes the course of political change in the country seems painfully slow. That is the nature of the republic, which is designed with its system of checks and balances to keep the government in check. The administrative state keeps the country functioning when the politicians can’t agree, but it too must be kept in line. The media overplays our divisiveness, but serves an important purpose, yet I think most of us are just to the right or left of center and know how to get along. On this Fourth of July, let’s remember we are Americans first and foremost!
OUR PRIVACY POLICY AT JERSEY BENEFITS & HAPPY 4TH OF JULY
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I do hope you had an enjoyable Independence Day and were able to reflect on the meaning of the holiday, relax some, and get to your destination without incident, if you were travelling. If you’d like to discuss your accounts in more detail, set up a contribution plan or have any questions regarding your investments, please feel free to contact me. Enjoy your summer!
Company Information
Jersey Benefits Advisors is the trade name used by John H. Kaighn to offer various products and services.
PO Box 1406
Ocean City, NJ 08270
Phone: (609) 827-0194
Fax: (866) 637-2479
Email: kaighn@jerseybenefits.com
http://jerseybenefits.com
John H. Kaighn is an Investment Advisor Representative & Registered Representative of Osaic Wealth, Inc. Securities and Advisory Services are offered through Osaic Wealth, Inc. Member FINRA & SIPC.
Osaic Wealth, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth, Inc.
10 Exchange Place
Suite 1410
Jersey City, NJ 07302
Osaic Wealth, Inc. is not affiliated with Jersey Benefits Advisors or Jersey Benefits Group, Inc.
Jersey Benefits Group, Inc., is a licensed Insurance Agency in the State of New Jersey & offers Insurance and Third Party Administration Services
PO Box 1406
Ocean City, NJ 08226
Phone: (609) 827-0194
Fax: (866) 637-2479
Email: kaighn@jerseybenefits.com
http://jerseybenefits.com
*The S&P 500, the DJIA, the NASDAQ and others referenced are unmanaged indices that are widely used as indicators of Market Trends. Past Performance does not guarantee future results and the performance of these indices does not reflect the fees and charges associated with investing. It is not possible to invest directly in an index.
*Dollar Cost Averaging through a systematic savings plan is an excellent way to build an account without a sizeable initial investment. Saving a portion of our pay each month is very important. Company sponsored pension plans are one method to save and should be used for retirement. Other systematic investment accounts, such as ROTH IRA’s, Traditional IRA’s, Coverdell Accounts, 529 Plans, Brokerage Accounts and Annuities can also be opened, and debited directly from checking or savings accounts. For more information, just call to set up an appointment. Referrals are always welcome.
All opinions expressed in this newsletter are independent of Osaic Wealth, Inc. and are solely those of John H. Kaighn and Jersey Benefits Advisors.
John H. Kaighn
