Kuby's Commentary

Last week, investor sentiment shifted dramatically from Greed to Fear due to soft economic data and unresponsive FOMC statements, causing major market declines. Despite solid corporate earnings, the S&P 500 fell 2.1%, the Nasdaq dropped 3.4%, and the Russell 2000 plummeted 6.7%, with the VIX spiking and bond yields falling. The Fed's continued restrictive monetary policy amidst a slowing economy raised concerns of a potential hard landing, further amplified by weak manufacturing and employment data. This week, investors remain cautious with the Nasdaq in correction territory, high volatility, and global markets selling off. Key focus areas include U.S. services sector data, initial jobless claims, and major earnings reports, alongside geopolitical tensions and domestic political instability.

Last week saw a significant market rally on Friday, ending a volatile week marked by a shift from tech stocks to small caps. The Nasdaq Composite experienced its worst one-day loss since 2022, but small and mid-caps saw gains of 3.5% and 2%, respectively. Outside of equities, financial markets remained stable, with minimal changes in the dollar, gold, and the yield on the 10-year Treasury. This week, focus shifts to earnings and the labor market, with key reports from major companies and the July jobs report anticipated, alongside the FOMC's monetary policy decision.

The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service. The information is not intended to be used as the basis for investment decisions, nor should the information be construed as advice designed to meet the particular needs of any investor. This commentary is presented to illustrate examples of the securities that North Star Investment Management Corporation and/or its affiliates ("North Star") may have bought for client accounts and the diversity of markets in which North Star Investments may invest, and may not be representative of current or future investments. You should not assume that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this commentary will be profitable or will be equal to any corresponding performance levels that might be indicated. Past performance is no guarantee of future results. Investments in securities involve risks including the possible loss of the principal invested. North Star and others associated with it, including employees, may have positions in and effect transactions in securities of companies mentioned or indirectly referenced in this commentary. North Star may buy, sell or hold these securities in proprietary or client accounts. North Star will not be providing regular updates or advising you of any changes in the views expressed herein. Investors should consider their investment objectives, risk tolerance, and financial situation and needs before investing in any security. Tax considerations, commissions, fees and other costs should be carefully evaluated with one's investment and/or tax advisors. Information provided is obtained from sources deemed to be reliable, but North Star cannot guarantee the accuracy or completeness of the information. This material may not be reproduced, distributed or transmitted to any other person in whole or in part without the prior written consent of North Star. A copy of North Star Investment Management Corporation's Form ADV Brochure, Privacy Notice and Business Continuity Plan summary can be obtained by calling 312-580-0900.

Last week, the market experienced notable shifts as

Last week, the broader market surged following remarks from Fed Chair Powell and a softer-than-expected CPI report, with small caps gaining over 5% and mid-caps rising more than 4%. The bond market rallied, with the 10-year Treasury yield dropping to its lowest level since March. This week, earnings season kicks off with 45 S&P 500 companies reporting, and consensus calls for 9.3% composite growth on 4.8% revenue growth. Retail Sales data for June will be released on Tuesday, expected to show a 0.1% month-over-month decline. Additionally, the jobs market is cooling, suggesting potential rate cuts ahead.

The S&P 500 kicked off the second half of 2024 with its best weekly performance in eight weeks, driven primarily by Big Tech, as the Nasdaq surged 3.5%. Despite this rally, there was notable performance dispersion, with the Equal Weight S&P 500 Index and small-cap indexes declining. Enthusiasm for Artificial Intelligence has propelled momentum stocks, while high interest rates have weighed down other sectors, and recent economic data suggests potential Federal Reserve rate cuts. This week, the focus will be on the consumer price index (CPI) report and the start of earnings season, with expectations for an 8.8% rise in S&P 500 earnings for the quarter.

Last week, the stock market remained relatively flat despite positive economic signals from FedEx and an expected inflation report. Consumer discretionary spending showed signs of weakness, suggesting potential Fed rate cuts in 2024, though the timing could be influenced by the upcoming election. Energy and Banking sectors outperformed following the debate, while Clean Energy and Cannabis sectors declined. This week, market attention will focus on the employment outlook with key jobs reports, potentially causing volatility due to holiday trading conditions.

Last week saw a significant trading volume spike due to Friday’s “triple witching” event and annual index rebalancing, with $5.5 trillion in options expiring. The S&P 500 advanced 0.6%, setting its 31st record high of 2024, despite modest profit-taking in tech stocks which left the Nasdaq Composite unchanged. Economic indicators painted a picture of a steady but slowing economy, highlighted by soft retail sales, existing home sales, and the Purchasing Managers Index. Notably, a dovish shift in Fed rhetoric emerged, with officials like Neel Kashkari and Adriana Kugler pointing to easing inflation and economic slowdown. This dovish drift aligns with similar moves by foreign central banks, which have either achieved their inflation targets or started easing policies. Looking ahead, the financial markets are keenly anticipating Friday’s PCE price index release, a critical inflation gauge favored by the Fed, with expectations of a 2.6% year-over-year increase.

The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service. The information is not intended to be used as the basis for investment decisions, nor should the information be construed as advice designed to meet the particular needs of any investor. This commentary is presented to illustrate examples of the securities that North Star Investment Management Corporation and/or its affiliates ("North Star") may have bought for client accounts and the diversity of markets in which North Star Investments may invest, and may not be representative of current or future investments. You should not assume that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this commentary will be profitable or will be equal to any corresponding performance levels that might be indicated. Past performance is no guarantee of future results. Investments in securities involve risks including the possible loss of the principal invested. North Star and others associated with it, including employees, may have positions in and effect transactions in securities of companies mentioned or indirectly referenced in this commentary. North Star may buy, sell or hold these securities in proprietary or client accounts. North Star will not be providing regular updates or advising you of any changes in the views expressed herein. Investors should consider their investment objectives, risk tolerance, and financial situation and needs before investing in any security. Tax considerations, commissions, fees and other costs should be carefully evaluated with one's investment and/or tax advisors. Information provided is obtained from sources deemed to be reliable, but North Star cannot guarantee the accuracy or completeness of the information. This material may not be reproduced, distributed or transmitted to any other person in whole or in part without the prior written consent of North Star. A copy of North Star Investment Management Corporation's Form ADV Brochure, Privacy Notice and Business Continuity Plan summary can be obtained by calling 312-580-0900.

Last week, mega-cap momentum stocks concealed broader market weakness, with hawkish Federal Reserve comments and disappointing Salesforce results driving declines. However, the week ended positively as the PCE Price Index aligned with a downward inflation trend, although the S&P 500 broke its five-week winning streak. This week, the focus shifts to Friday's May jobs report, the final one before the Federal Reserve's June meeting. Debate continues over potential rate cuts, but resilient economic indicators suggest the Fed may hold rates steady, while the stock market remains capable of performing well without cuts.

Last week, the S&P 500 extended its rally despite underlying weaknesses across most equity sectors, with notable strength only in mega-cap technology stocks like Nvidia. The broader market saw more declining than advancing issues, with the Dow Jones and small/mid-cap indexes falling while the Nasdaq gained due to strong Nvidia earnings. Hawkish Federal Reserve comments and signs of a slowing economy, evident from major retailer earnings and consumer sentiment data, contributed to the market's mixed performance. This week, attention turns to the personal consumption expenditures price index, with expectations of a modest consumer confidence decline and potential Fed rate hike discussions.