2023 | July 31

The Market

Stocks Fall

The S&P 500 posted its third positive weekly result in a row, gaining around 1%, and the NASDAQ added about 2%. The Dow on Wednesday climbed for the 13th trading day in a row, marking that index’s longest positive streak since 1987. The streak ended on Thursday, and the Dow finished up nearly 1% for the week.

As expected, the U.S. Federal Reserve returned to rate hiking mode after pausing in June, as it lifted its key benchmark rate by 0.25% to the highest level since 2001. The increase to a range between 5.25% and 5.50% was the 11th hike since March 2022, when spiking inflation led the Fed to lift rates from a near-zero level.

The U.S. economy picked up momentum in the second quarter, easing anxiety about the prospect of a recession in the wake of interest-rate increases. GDP expanded at an annual rate of 2.4% - well above the consensus forecast of economists and up from a 2.0% rate in this year’s first quarter.

Near the midpoint of earnings season, companies in the S&P 500 were on track to record an overall decline in their profit margins for the sixth quarter in a row. The average net profit margin halfway through earnings season was 11.1%, versus 12.2% in the same quarter a year earlier, according to FactSet. Margins peaked at 13.0% in the second quarter of 2021.

The U.S. Federal Reserve’s preferred gauge for tracking inflation showed that consumer prices increased in June at the slowest monthly pace in more than two years. The Personal Consumption Expenditures Price Index rose at a 3.0% annual rate, down from 3.8% in May. Excluding volatile food and energy prices, core inflation climbed 4.1% in June versus 4.6% in May.

On the heels of the U.S. Federal Reserve’s latest interest-rate increase, the yield of the 10-year U.S. Treasury bond closed above 4.00% on Thursday for the fourth time this year. The yield pulled back slightly on Friday, when it was trading around 3.97%, well above the previous week’s closing level of 3.85%.

The European Central Bank raised its key interest rate to 3.75% while also signaling that it could soon pause its rate hiking cycle as soon as September. While 3.75% is the ECB’s highest level in 22 years, that rate remains well below the U.S. Federal Reserve’s current benchmark rate range of 5.25% to 5.50%.

A monthly U.S. labor market update due out on Friday will show whether the slowdown in June’s jobs growth extended into July. In June, the economy generated 209,000 new jobs, short of most economists’ expectations and marking the smallest monthly gain since December 2020. June’s unemployment rate slipped to 3.6%. 

Source: John Hancock Investment Management

Estate Planning Conversation with Allie Bohannon

Trivial Superpowers

Several publications, blogs and social media sites have asked people to share their trivial or useless superpowers. The editor of the Annals of Improbable Research, Marc Abrahams, defines this as, “the ability to reliably do some particular task that seems mundane to them, but that most people find impossible to do except once in a while by sheer luck.”

Here are a few of the responses readers shared with Abrahams and Marginal Revolution, which is the economics blog of George Mason University professors Tyler Cowen and Alex Tabarrok.

“I can recall being amazed to learn at age 7 that my father, a broadly competent outdoorsman, after only ten minutes of walking in a jungle in Mexico had gotten lost. I knew exactly which way our car was and led him back to it, coming out of the jungle onto the road about 20 feet from the car…Of course, GPS and smartphones have made this not very useful.”

“I usually can estimate pretty closely what time it is, which was fairly useless back when people wore watches and is almost totally useless in cellphone era.”

“…one of my Useless Super-Powers is the ability to pour nearly identical amounts of liquid without thought or effort. In practice, for example: if I’m pouring wine for four people, there is almost always no visible difference between the contents of the glasses.”

“[I have] the ability to reorganize fridges/freezers and always find more room for whatever needs fitting.”

“…had a friend who could recite back to you the letters of any word you supplied, but in alphabetical order, and instantly. We tried to stump him with crazy complex words, to no avail.”

“I can always tell if someone is lying just by looking at them…I can also tell, just by looking at them, if they are standing up.”

Some might say that investors’ ability to remain invested and focused on long-term goals in uncertain markets is a superpower. If you have questions about the market or your investments, please get in touch.

Phone: (615) 709-8709

Fax: (615) 505-3306

eMoney

TD Ameritrade

Advyzon

Past performance does not guarantee future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product (including those recommended or undertaken by AJ Advisors, LLC), or any non-investment related content, made reference to directly or indirectly in this communication will be profitable, equal any indicated historical performance level(s), be suitable for your portfolio or individual circumstances, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. You should not assume that any discussion or information contained in this communication serves as the receipt of, or as a substitute for, personalized investment advice. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult with the professional adviser of their choosing. AJ Advisors, LLC is neither a law firm nor a certified public accounting firm and no portion of the content herein should be construed as legal or accounting advice. If you are an AJ Advisors, LLC client, please remember to contact the firm, in writing, if there are any changes in your financial situation or investment objectives or if you wish to impose, add, or modify any reasonable restrictions on our investment advisory services. Until so notified, AJ Advisors, LLC will continue to rely on the most recent information provided. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available upon request.