Market Insights, June 2023

Monthly Market Roundup | U.S. Equities

Big Movers in June 2023

68%

Carnival (CCL). The cruise-ship operator rallied as demand continued to improve three years after the coronavirus pandemic.

47%

Norwegian Cruise Line (NCLH): The company rallied along with other cruise-ship operators as investors returned to travel-related stocks that struggled during the pandemic.

37%

Generac (GNRC): Worries about power failures in Texas lifted the maker of electric generators. It came during heat waves in the U.S. South, which relies on air conditioning.

16%

Dollar General (DG): The discount retailer missed estimates and lowered its comparable-sales forecast.

12%

EPAM Systems (EPAM): The IT-services company lowered guidance, continuing to struggle after exiting Russia.

11%

Humana (HUM): The health insurer dropped on worries that higher surgery costs will hurt profits.

Key Economic Events Last Month

noInflation Hits Two-Year LowThe Consumer Price Index rose 4% in May, its smallest increase since March 2021. The lower inflation number matched estimates and reduced worries about further rate hikes. (13/6)
downFed Skips Rate Hike but Stays HawkishThe Federal Reserve left interest rates unchanged for the first time in 11 meetings. Policymakers projected another 50 basis points of hikes this year. Chairman Powell said “nearly all” policymakers wanted to tighten further. (14/6)
upHome Building Surges Amid ShortageHousing starts increased in May at the fastest pace since 1990. Building permits also surprised to the upside as builders responded to tight inventories and strong demand. (20/6)
up Consumer Confidence Jumps to 16-Month HighConsumer confidence rose more than expected to its highest level since January 2022. Views of current conditions and future expectations improved. Younger Americans were more optimistic. (27/6)

Key Futures Contracts

Product NameCurrent MonthExpirationNext Month1-Mon%
S&P 500 E-Mini (@ES)ESU23 (Sep) 15 Sep 23 ESZ23 (Dec) +6%
*S&P 500 E-Mini Micro (@MES) MESU23 (Sep) 15 Sep 23 MESZ23 (Dec) +6%
Nasdaq-100 E-Mini (@NQ) NQU23 (Sep) 15 Sep 23 NQZ23 (Dec) +5.9%
*Nasdaq-100 E-Mini Micro (@MNQ) MNQU23 (Sep) 15 Sep 23 MNQZ23 (Dec) +5.9%
Dow Jones E-Mini (@YM) YMU23 (Sep) 15 Sep 23 YMZ23 (Dec) +4.1%
*Dow Jones E-Mini Micro (@MYM) MYMU23 (Sep) 15 Sep 23 MYMZ23 (Dec) +4.1%

* Micro contracts are one-tenth the size of standard e-minis.

Events to Watch This Month

DateEventWhat to watch
Fri, 7-JulNon-farm payrollsJob-market conditions: unemployment, wages, hours worked.
Wed, 12-JulConsumer price index Inflation trends
Tue, 18-JulRetail sales Strength of consumer spending
Wed, 14-JunBig Tech Earnings Apple, Microsoft, Alphabet and Amazon.com are expected to announce quarterly results.
Wed, 26-JulFed meeting Interest-rate statement, press conference.

Sector Watch

  • Consumer Discretionary12%
  • Industrials11%
  • Materials10%
  • S&P 5006%
  • Financials6%
  • Energy6%
  • Technology6%
  • Real Estate5%
  • Communications5%
  • Health Care4%
  • Consumer Staples2%
  • Utilities1%
  • Consumer discretionaries led the S&P 500 in June as cruise ships joined rallies in large Nasdaq stocks like Tesla and Amazon.com.

  • Industrials outperformed as transports and manufacturing stocks advanced.

  • Materials saw widespread buying, led by metals and providers of construction aggregates.

  • Utilities performed the worst as investors shunned safe havens.

Noteworthy Calls & Predictions

04-June

The Fed may have slowed inflation without causing a recession, according to Paul Krugman. The Nobel Prize-winning economist cited falling unit labor costs and lower inflation expectations. He added that further rate increases may not be needed.

U.S. Economy

14-June

The inflationary impact of shelter costs “is essentially guaranteed” to reverse lower in the second half of the year, according to a survey of economists by CNBC. The study noted that shelter is the largest category in the consumer price index. It also cited how the data lags real-market conditions by 6-12 months.

Inflation

20-June

Goldman Sachs raised its price target for the S&P 500 as inflation eases and investors focus on the potential of artificial intelligence (AI). The bank also sees less risk of a recession in the next year. Its 12-month price target for the index is now 4700.

S&P 500

26-June

The AI boom has inaugurated a new bull market in technology stocks, according to Wedbush analyst Dan Ives. He estimated the new applications could add $1 trillion to IT spending and compared the current moment to 1995.

Technology

27-June

Fixed-income investors are absorbing greater issuance of Treasury securities without significant disruption, according to Bloomberg. Some investors worried reserves would be drained from the banking system, but the newswire reported that hasn’t occurred so far.

U.S. Money Markets



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