Weekly Market Watch

Market Outlook

Global equities kicked off summer with a third consecutive week of positive performance. Industrial production data also delivered its strongest growth rate of the year, supporting cyclical, value and smaller-capitalization stocks over large growth stocks. Retail sales and housing data came in below consensus expectations, which reinforces the outlook for potential monetary policy easing from the Federal Reserve (Fed) later this year. Easing policy may be a tailwind for value stocks, which have struggled in the inflationary, high interest rate environment.

The median existing home price reached a new high of $419,300, a 5.8% increase compared to last year. The housing inventory shortage is keeping a floor on how quickly inflation can fall, as structural issues within the industry are largely unaffected by monetary policy. We look forward to this week’s Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge, for further insight on the path of monetary policy.

Table of the Week

Last week, NVIDIA Corp. briefly overtook Microsoft Corp.’s spot as the largest publicly traded company in the United States with a market capitalization of more than $3.3 trillion.

We believe the current market-leading companies reflect both the business and innovation cycle; personal computing, securitized lending, software as a service and artificial intelligence.

In the current phase of the business cycle, exposure to quality companies that can innovate and grow earnings remains attractive, in our view.

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