Equity Shift In Leadership

By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group

Equity leadership has been shifting over the past few weeks, but has taken another turn after the Fed's recent rate cut.  Since the beginning of July, we've seen other "out-of-favor" asset classes out-pace the tech-heavy Nasdaq and semiconductors.  The Nasdaq is only up 1.2% since July 1st and semiconductors are down more than 6%.  Meanwhile, other equity asset classes - such as, Small Caps, Mid-caps, Large Value, & Bonds - have all returned north of 5%.  Those sectors that out-performed over the past 12 months - Tech, Communication Services, and Consumer Discretionary - have stretched valuations, while out-of-favor sectors - Utilities, Consumer Staples, and Energy - are at normal valuations or just slightly elevated valuations.

Consumers are still feeling stretched despite falling inflation and the Fed beginning a rate cut cycle.  One thing coming out of the consumer survey conducted monthly by the University of Michigan is the fact that consumers feel now is a bad time to purchase a home.  The latest figures on Personal Spending and Personal Income released last week show a general downward trajectory.  At the same time, inventories of goods seem to be more elevated in 2024 than they were in 2023.  There are also signs of weakness in the labor market.  The Conference Board's survey results last week show a higher number of consumers indicating that jobs are harder to get, while a fewer number of consumers are indicating that jobs are plentiful.  Diversification is key right now in portfolios as markets shift.

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Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

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Past Performance does not guarantee future results.