Last Week
It has been interesting following the stock market’s “Magnificent Seven” over the last few years, as investors found salvation in that narrow group of stocks, like the villagers placed their hopes on the 7 gunslingers in the 1960 classic movie. In the film, the villagers turn against the gunslingers, and four of them meet their demise. Though not shot down dead, it was tough sledding for NVIDIA and its cohorts last week, with the Roundhill Magnificent Seven ETF trading down 5.9% and now on pace for a 12.9% monthly loss. The good news is that the money is rotating into other sectors, with advancing issues outnumbering declining issues by a 5-4 ratio, and Small and Mid Cap Indexes finishing in the green, despite a 1.9% loss in the S&P 500 and a 4.6% drubbing in the Nasdaq composite. The leading sectors were the defensive sectors, specifically Health Care and Utilities, while the high-flying semiconductors nosedived, and even SpaceX came back down to earth. The yield on the 10-Year Treasury inched down 8 basis points to 4.37%, while Gold and the dollar were both steady.
On the geopolitical front, the U.S. and Iran agreed to continue negotiations to reach a deal within 60 days. Still, Iran launched drone attacks in the Strait of Hormuz, and the U.S. military responded with missile attacks, intensifying tensions between the two nations. Despite that tension, Crude Oil dropped 9.2% this week to settle around $70.25 and is now trading below its prewar level.
The economic reports were benign, as core PCE inflation in May was in line with consensus, personal income and spending exceeded expectations, and the U.S. Q1 GDP growth estimate was upwardly revised to 2.1% from 1.6%.
Notable news stories this week from our intern group included the growing collision between the FIFA World Cup, sports betting, and prediction markets, as reports that Meta is developing its own prediction markets platform rattled the shares of Robinhood, DraftKings, and Flutter. While the market initially reacted as though a major competitive threat had emerged, the consensus was that investors may have gotten ahead of themselves, particularly with World Cup betting activity expected to reach record levels. Another story that caught their attention was Apple’s decision to raise iPhone prices as AI-related demand continues to strain the global memory and storage chip supply chain.
On the Chicago Sports Scene, the NBA draft was a highlight as the Bulls selected Caleb Wilson with the 4th pick in the first round. He looks like he could have a bright future at the United Center. Additionally, the Cubs and White Sox are playing good baseball, so maybe there is hope for postseason play this fall.
This Week
Over the weekend, the US and Iran both conducted missile and drone strikes, leading both sides to claim violations of the ceasefire, undermining the ongoing peace talks. By Monday morning, both parties expressed a more conciliatory tone, leading to a higher market opening.
With U.S. stock and bond markets closed on Friday in observance of Independence Day, the Jobs Report will be released on Thursday and will likely be the week’s primary market focus.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.