Presented by Mark Gallagher

Nvidia was down last week despite a strong rally in which it briefly became the largest stock by market capitalization. Its move lower dragged growth and technology stocks down. Treasuries sold off in unison across the curve.

Quick Hits

1. Report releases: Housing starts and existing home sales slowed in May, signaling a cooling housing market.
2. Financial market data: Nvidia fell, dragging growth stocks with it.
3. Looking ahead: This week will focus on consumer confidence and business sentiment.

Keep reading for an in-depth look.

Report Releases—June 17–21, 2024

Retail Sales: May (Tuesday)

Retail sales came in below economist estimates after falling modestly in April.

-Expected/prior month retail sales monthly change: +0.3%/–0.2%

-Actual retail sales monthly change: +0.1%

Industrial Production: May (Tuesday)

Industrial production surged, driven by rising manufacturing production and capacity utilization.

-Expected/prior month production change: +0.3%/+0%

-Actual production change: +0.9%

National Association of Home Builders Housing Market Index: June (Wednesday)

Home builder sentiment fell to its lowest point this year as high mortgage rates and prices weighed on prospective homebuyers.

-Expected/prior month sentiment: 46/45

-Actual sentiment: 43

Existing Home Sales: May (Friday)
The pace of existing home sales slowed, marking three consecutive months with slowing sales growth.

-Expected/prior month existing home sales change: –1%/–1.9%

-Actual existing home sales change: –0.7%

The Takeaway

-Data was mixed last week, with softer retail sales and strong manufacturing production.

-The housing market also saw mixed data, with June sentiment turning sour but home sales faring better than expected.

Financial Market Data

Equity

Source: Bloomberg, as of June 21, 2024

Value stocks outperformed growth. Nvidia became the largest stock in the world by market capitalization, briefly passing Microsoft before relinquishing the top spot later in the week. This drove down growth stocks, whereas consumer discretionary, energy, and financials were among the top performing sectors. Utilities, technology, and real estate fared worst as home sales continued to soften.

Fixed Income

Source: Bloomberg, as of June 21, 2024

The Treasury yield curve was little moved, with a relatively parallel shift higher. The 2-year rose 4.5 basis points (bps) to close the week at 4.73 percent, the 10-year grew 5 bps to 4.26 percent, and the 30-year increased 5 bps to 4.4 percent.

The Takeaway

-Given its size, Nvidia is worth watching for a potential rotation away from artificial intelligence names.

-Treasuries sold off slightly.

Looking Ahead

This week will focus on consumer confidence and business sentiment. Highlights include data on consumer confidence, durable goods orders, and personal income and spending.

-The week kicks off on Tuesday with the release of the Conference Board Consumer Confidence Index for June. Consumer confidence is expected to fall modestly after improving more than expected in May.

-Throughout the week, we will see several regional services and manufacturing data points from Federal Reserve Banks in Dallas, Philadelphia, Chicago, and Richmond.

-On Thursday, we expect the preliminary release of durable goods orders for May. Headline durable goods orders are set to remain unchanged, whereas core goods orders are expected to rise.

-Finally, on Friday we’ll receive the personal income and spending report for May. Personal income and spending are set to rise after smaller-than-expected increases in April.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Apple continued to rally following its Worldwide Developer Conference; the company unveiled new AI software updates that are expected to drive a stronger iPhone upgrade cycle. Treasuries rallied sharply on the back of softer inflation.

Quick Hits

1. Report releases: Producer and consumer price growth slowed in May, which was a welcome sign for investors and the Federal Reserve (Fed).
2. Financial market data: Apple continued to rally after its Worldwide Developer Conference.
3. Looking ahead: We expect many releases this week, including retail sales, industrial production, and several pieces of housing data.

Report Releases—June 9–14, 2024

Consumer Price Index (CPI): May (Wednesday)

Consumer inflation slowed on a monthly and year-over-year basis in May. Both headline and core consumer inflation came in below economist estimates.

-Prior monthly CPI/core CPI growth: +0.3%/+0.3%

-Expected monthly CPI/core CPI growth: +0.1%/+0.3%

-Actual monthly CPI/core CPI growth: +0.0%/+0.2%

-Prior year-over-year CPI/core CPI growth: +3.4%/+3.6%

-Expected year-over-year CPI/core CPI growth: +3.4%/+3.5%-

-Actual year-over-year CPI/core CPI growth: +3.3%/+3.4%

Federal Open Market Committee (FOMC) Rate Decision: June (Wednesday)

As widely expected by investors and economists, the Fed left the federal funds rate unchanged at the conclusion of its June meeting.

-Expected/prior federal funds rate upper limit: 5.5%/5.5%

-Actual federal funds rate upper limit: 5.5%

Producer Price Index (PPI): May (Thursday)

The trade deficit widened less than expected, though the April deficit still marks the largest monthly deficit in more than a year.

-Prior monthly PPI/core PPI growth: +0.5%/+0.5%

-Expected monthly PPI/core PPI growth: +0.1%/+0.3%

-Actual monthly PPI/core PPI growth: –0.2%/+0.0%

-Prior year-over-year PPI/core PPI growth: +2.3%/+2.5%

-Expected year-over-year PPI/core PPI growth: +2.5%/+2.5%

-Actual year-over-year PPI/core PPI growth: +2.2%/+2.3%

Preliminary University of Michigan Consumer Sentiment Survey: June (Friday)
Consumer sentiment fell more than expected in June due to declining consumer views on both current and expected economic conditions.

-Expected/prior month consumer sentiment survey: 72/69.1

-Actual consumer sentiment survey: 65.6

The Takeaway

-CPI and PPI reports were below expectations in May.

-The FOMC held rates steady for June despite softer-than-expected inflationary data on the morning of the rate announcement.

Financial Market Data

Equity

Source: Bloomberg, as of June 14, 2024

Large-cap U.S. equities led the way yet again, with mega-cap technology names driving the market. Apple continued its tech rally beyond its Worldwide Developer Conference, where it debuted several AI updates. Oracle and Broadcom were also strongly up, rising more than 9.5 percent. Energy, financials, and consumer staples struggled, with falling inflation giving way to concerns about slower growth and lower rates, along with a greater appeal for bonds.

Fixed Income

Source: Bloomberg, as of June 14, 2024

The yield curve saw a major rally in the 5-year maturity and beyond. The 10-year Treasury yield fell 22 basis points (bps), closing at 4.21 percent, and the 30-year dropped 20 bps to 4.35 percent. Surprising softness in Wednesday’s CPI report triggered the large move, which was further confirmed by a soft PPI report.

The Takeaway

-Apple, Nvidia, and the AI narrative continue to carry the market.

-Treasuries rallied sharply this week on softer inflation data.

(80-200 words) Looking Ahead

Despite the midweek holiday, we expect plenty of economic data. Highlights will include retail sales, industrial production, and several pieces of housing data.

-The week kicks off on Tuesday with the release of retail sales and industrial production data for May. We expect retail sales to rise modestly after remaining unchanged in April. Industrial production is set to improve, due in part to rising capacity utilization.

-Wednesday will see the release of the National Association of Home Builders Housing Market Index for June. Home builder confidence is expected to remain unchanged, which would leave the index in contractionary territory for the second consecutive month.

*Finally, on Friday, existing home sales for May will be released. Sales are set to fall for the third consecutive month.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Software stocks were hit hard; Salesforce showed signs of a slowing economy and less software spending from its customers. AI infrastructure firms such as Nvidia continued to move higher.

Quick Hits

1. Report releases: Personal income and spending growth slowed in April.
2. Financial market data: Software stocks tumbled as companies tightened budgets.
3. Looking ahead: This week, the focus will be on the May employment report.

Report Releases—May 28–31, 2024

Conference Board Consumer Confidence Index: May (Tuesday)

Consumer confidence surprisingly improved in May, breaking a three-month streak of declines. The improvement was largely driven by a notable rise in consumer expectations.

-Expected/prior month consumer confidence: 96/97.5

-Actual consumer confidence: 102

Federal Reserve Beige Book (Wednesday)

The Beige Book showed slight or modest growth for most of the 12 districts reporting, with 2 noting no change in activity. Overall outlooks were slightly more pessimistic amid reports of rising uncertainty and greater downside risks of tight credit standards and high interest rates, constraining growth.

Second Estimate of GDP: First Quarter (Thursday)

The second estimate of first-quarter GDP was in line with expectations. As part of the report, we received the Personal Consumption Expenditures Price Index (Core PCE) for the first quarter. The reading, which excludes food and energy, was slightly below expectations at 3.6 percent annualized, versus expectations of 3.7 percent.

-Expected/first-quarter GDP estimate: 1.3%/1.6%

-Actual second first-quarter GDP estimate: 1.3%

Personal Spending and Personal Income: April (Friday)
Personal income and spending continued to rise in April, though both slowed compared with the
previous month.

-Expected/prior personal income monthly change: +0.3%/+0.5%

-Actual personal income change: +0.3%

-Expected/prior personal spending monthly change: +0.3%/+0.7%

-Actual personal spending change: +0.2%

The Takeaway

-Consumer confidence was higher than expected as consumer expectations improved.

-Personal income and spending growth slowed in April.

Financial Market Data

Equity

Source: Bloomberg, as of May 31, 2024

U.S equities were mostly lower. Energy, real estate, and utilities were among the top performing sectors. Underperformers included health care, communication services, industrials, and technology. Software stocks were a notable soft spot, with Salesforce, Intuit, ServiceNow, Paycom, and Workday each falling more than 12.9 percent. Salesforce cited a slowdown in the macroeconomic environment and corporate budgets as it just missed revenue estimates at $9.13 billion versus expectations of $9.17 billion, its first top line miss in 18 years.

Fixed Income

Source: Bloomberg, as of May 31, 2024

The yield curve saw a slight steepening as consumer confidence rose and the second estimate of first-quarter GDP was in line. The 2-year yield fell 6 basis points (bps), closing the week at 4.89 percent. The 30-year rose 8 bps to close at 4.65 percent and the 10-year increased 5 bps to close at 4.51 percent.

The Takeaway

-Software stocks receded as Salesforce missed sales estimates. Corporations appear to be tightening budgets on the software side.

-The yield curve steepened slightly as short-term yields fell and long-term yields rose.

Looking Ahead

The focus this week will be on the May employment report, which is due Friday. We also expect Institute for Supply Management (ISM) and international trade balance reports.

-The week kicks off on Monday with the release of the ISM Manufacturing index for May. Manufacturer confidence is expected to improve modestly after falling more than expected
in April.

-On Wednesday, we expect the release of the ISM Services index for May. Service sector confidence is expected to improve after falling into contractionary territory in April.

-The international trade balance report for April is expected on Thursday. It is set to increase, due in part to increased imports of goods.

-Finally, on Friday, the employment report for May will be released. Hiring is expected to accelerate after slowing more than expected in April. If estimates hold, the 180,000 jobs that are forecast would represent a healthy level of hiring.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Quick Hits

1. Markets Rebound in May

Stocks rallied after declining in April.

2. Falling Yields Support Bond Prices

Falling interest rates caused bond price to rise.

3. Labor Market Cools in April

The April jobs report showed encouraging signs of softening labor demand.

4. Additional Signs of Slowing Growth

Several key economic updates pointed toward slowing growth.

5. Market Risks to Monitor

Domestic, international, and unknown risks remain for markets.

6. Improving Fundamentals and Positive Outlook

Economic and market fundamentals support future improvements.

Markets Rebound in May  

Markets rallied in May, with all three major U.S. indices up for the month. The S&P 500 gained 4.96 percent, the Dow Jones Industrial Average grew 2.58 percent, and the Nasdaq Composite soared 6.98 percent. Equity markets were supported by solid earnings growth and lower interest rates.

Per Bloomberg Intelligence, as of May 30, with 98 percent of companies having reported earnings, the average earnings growth rate for the S&P 500 in the first quarter was 7.8 percent. This is notably higher than analyst estimates at the start of earnings season for a 3.8 percent increase. Growth was widespread, with 10 of 11 sectors beating analyst estimates. Earnings have increased in each of the past three quarters, which is an encouraging sign for investors because fundamentals drive
long-term performance.

Technical factors were also supportive. All three major U.S. indices spent the entire month above their respective 200-day moving averages. (The 200-day moving average is a widely monitored technical indicator because sustained breaks above or below this level can signal shifting investor sentiment for an index.) The combination of continued technical support and improving fundamentals in May was welcome after short-lived declines in April.

The story was similar for international equities. The MSCI EAFE Index gained 3.87 percent and the MSCI Emerging Markets Index rose 0.59 percent. Technical results were also supportive for international stocks; both the MSCI EAFE and MSCI Emerging Markets indices spent the entire month above their respective 200-day moving averages.

Falling Yields Support Bond Prices

Falling long-term interest rates helped support bond prices. The 10-year Treasury yield fell from 4.69 percent at the end of April to 4.51 percent at the end of May. Signs of slowing economic growth and a cooling job market contributed to the fall in interest rates. The Bloomberg Aggregate Bond Index gained 1.7 percent.

High-yield bond returns were also positive, supported by stable credit spreads that ended the month largely unchanged. The Bloomberg U.S. Corporate High Yield Index gained 1.1 percent.

Labor Market Cools in April

The May rally for markets was sparked by signs of slower economic growth, which helped calm investor concerns about a potentially overheated economy. The April job report was a highlight; it showed a notable slowdown in hiring, with 175,000 jobs added during the month. This was down from the 315,000 jobs added in March, and it was viewed by investors and economists as a healthy development after months of stronger-than-expected job growth to start the year.

Underlying employment data also pointed toward slower growth, with annual wage growth falling to a two-year low and the unemployment rate picking up modestly. Softening labor market conditions are one factor the Federal Reserve (Fed) has noted could lead to interest rate cuts later this year because of the central bank’s dual mandate to support stable prices and maximum employment.

The Takeaway

-Slowing job growth in April was a welcome development for investors concerned about inflation.

-Underlying data also showed encouraging signs of softening labor demand.

Additional Signs of Slowing Growth

Other economic releases also pointed toward slower but potentially healthier growth for the economy. Personal income and spending growth came in below expectations in April, which is another good sign for investors concerned with inflation. Speaking of inflation, the April Consumer Price Index report was also supportive; it showed that consumer prices rose less than expected in the month and consumer inflation slowed on a year-over-year basis.

Consumer and business confidence also declined in April. As you can see in Figure 1, service sector confidence fell for the third consecutive month, bringing confidence to its lowest level in more than one year. This is a diffusion index, where values above 50 indicate expansion and values below 50 indicate contraction. April marked only the second time service sector confidence has dropped into contractionary territory since the end of pandemic-era lockdowns. The service sector accounts for the majority of hiring in the U.S.; falling service sector confidence signals potentially lower demand ahead for service
sector workers.

Figure 1: ISM Services PMI Composite Index

Source: Institute for Supply Management/Haver Analytics, 05/03/2024

The Takeaway

-Slowing economic growth and falling inflationary pressure were welcome developments.

-Falling consumer and business confidence could be a sign of further slowdowns ahead.

Market Risks to Monitor  

Although the signs of slowing growth were largely welcomed by investors and economists, inflation remains one of the most pressing risks for markets. As we saw in April, interest rates and stocks remain sensitive to signs of rising inflationary pressure, and it’s possible we’ll see an uptick in inflation in the months ahead that could dissuade investors.

In addition, we face considerable political uncertainty because of the U.S. federal elections in November. We’re likely to see this uncertainty ramp up as we kick off the political convention season this summer and head toward Election Day in the fall.

International risks remain, too, as shown by continued conflicts in Ukraine and the Middle East. Although the direct market impact of these geopolitical events has been largely muted, they still serve as sources of global uncertainty that have the potential to negatively impact markets. In addition, the continued slowdown in China is worth monitoring because of the nation’s importance to the global economy.

And, of course, there are always unknown risks that could materialize and affect markets.

The Takeaway

-Real risks remain for markets, both domestically and abroad.

-Domestic risks include inflation and political uncertainty, whereas ongoing conflicts in Ukraine and the Middle East highlight the international risks.

Improving Fundamentals and a Positive Outlook

Despite the risks markets face, we are in a good place on the whole. The signs of slowing but still positive growth for the economy were a welcome development and signal a potentially healthier economic backdrop in the second half of the year. In addition, strong earnings growth in the first quarter was a positive sign for investors. Looking ahead, analysts expect to see continued strong earnings growth throughout the year, which should be a tailwind for markets. With a supportive economic backdrop and improving fundamentals, markets appear set for a strong second half of the year.

That’s not to say we can’t or won’t face setbacks along the way. April was a reminder that, though we’ve made progress in tamping inflation down, there remains real work to get back to the Fed’s 2 percent target. Although the most likely path forward is for continued economic growth and market appreciation, it’s quite possible we’ll see short-term speed bumps along the way. Given the potential for uncertainty, a well-diversified portfolio that matches investor goals and timelines remains the best strategy for most investors. If concerns remain, however, speak to your financial advisor to review your financial plans.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation. 

Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network