Market Brief - June 2024
Posted:June 6, 2024
Categories: Market Update, Bonds, Cash, Commentary, Currencies, Government Bond Yields, Investing, Stocks
MARKET - YTD RETURNS
S&P 500 Index +11.3%
Total US Stock Market +10.1%
International Developed +7.1%
Emerging Market Stocks +3.4%
Total Global Stock Market +8.9%
3-Month US Treasury Bill 5.39% (+4 bp)
2-Year US Treasury Note 4.89% (+64 bp)
10-Year US Treasury Note 4.51% (+64 bp)
US Aggregate Bond Index -1.64%
Gold ($/oz) $2,342 (+13%)
Bloomberg Commodity Index +4.4%
Consumer Price Inflation (CPI) 3.4% yoy
Stocks edged higher in May by less than 1%. Markets remain strong with the global stock market up 8.9% this year. US stocks continue to lead global markets. In particular, Nvidia Corp continues to outperform, up a mind-boggling 121% through the end of May. The chipmaker has contributed to roughly 30% of the total return of the market (see chart below). Some commentators warn stocks like Nvidia will come crashing down much like many companies in the tech bubble of the early 2000’s. However, it’s important to understand this is a real company with real earnings. While valuations can certainly become stretched in bull markets, global investors are recycling more and more US dollars back into large, blue-chip US companies. Can stocks correct? Of course. Will they correct into a bear market? Yes, at some point. Markets never go up or down in straight lines. However, long-term investors can ignore the noise, stay allocated, and ensure proper diversification to avoid potholes.
Figure 1: NVDA YTD Contributions to the Market
Source: Morningstar
For the year, bonds are down roughly 1.6%. As interest rates move higher, bond prices move lower. The yield curve remains inverted with short-term interest rates offering investors more yield than those that venture out on the curve.
Commodities moved higher this month and have returned 4.4% this year via the Bloomberg Commodity Index. Gold remains firm as does silver as investors and Central Banks, especially in the East, have been consistent buyers of gold. Consumer price inflation has come down year over year, but much of the inflation we experienced during the COVID crisis remains. Increase the number of dollars in circulation by $6-7 trillion as the US did in 2020 and prices will rise.
Quote of the Month
“Do not save what is left after spending, but spend what is left after saving.”
Warren Buffett
DISCLOSURES & INDEX DESCRIPTIONS