The Weekly Wealth of Knowledge is your download of this week’s most important topics related to our community, financial planning, the markets and more! In July, we continue with the theme of the month, “independence.” Our content all month long will be highlighting all of the benefits of working with an independent financial services firm like Moneco and ways to pursue financial stability.
In this issue:
- Moneco Insights – Passive Income & Financial Independence (3 min read)
- Solid Market Gains For Q2 (3 min read)
- June Inflation Falls (2 min read)
- BONUS: 6th Annual Fairfield Police Sunset 5k – Presented by Moneco Advisors
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Moneco Insights – Passive Income & Financial Independence
As we continue with the theme of “independence” all month long, this week our Insights team looks at how passive income can play a role towards pursuing financial independence. If the typical 9-5 job is not for you, you may want to continue reading. We will define what passive income entails, the types of it within the marketplace and whether it is a good path for you to potentially pursue. As always, if you have any questions, give us a call.
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Solid Market Gains For Q2
Stocks finished the first half of the year the same way they started — with solid gains. Strong rallies from big tech names, combined with somewhat softer economic and inflation data, helped propel the S&P 500 to its seventh monthly gain in the past eight months and set dozens of new record highs along the way.
America isn’t the only birthday we celebrate in July. The Federal Reserve’s (Fed) interest rate “pause” turns one year old — the Fed’s last rate hike came on July 23, 2023. Fed pauses (neither rate hikes nor cuts) have generally been good for stocks, especially the longer ones, with gains for the S&P 500 lasting about eight months in five of the last six pauses. In what is currently the second-longest pause since the 1970s, the S&P 500 is up about 20% and nearing the 22% gain registered during the longest pause in 2006–2007. This means the current bull market has already captured the average historical gain for year two of a bull market, a few months before its two-year mark on October 12.
So, what might the second half of 2024 have in store for stocks? If history is a guide, then more gains are possible, as strong first halves have historically been followed by above-average second half returns of about 6.0%. When first-half gains were 10% or greater, the index averaged a 7.7% advance in the second half. S&P 500 companies in aggregate are expected to deliver double-digit earnings growth in the upcoming second quarter earnings season, which may offer near-term support for stock prices — particularly AI beneficiaries.
However, bull markets are not linear, and pullbacks or a correction should be expected in the second half. Political and geopolitical risks are rising. The AI trade could fizzle. Inflation data, including the Fed’s preferred measure for May, has cooperated of late, but that could reverse and push yields up again.
Furthermore, this market’s advance has been quite narrow. In fact, technology and internet stocks have driven 70% of the year-to-date advance, with about 30% of it coming from NVIDIA. That’s a big gap to fill in a possible tech sell-off. Rotating into more attractively valued areas of the market, potentially industrials or energy, might help limit downside, but that is no sure thing.
As always, if you have questions, we are here for you.
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June Inflation Falls
Last week the U.S. Bureau of Labor Statistics released its June Consumer Price Index report. The report showed that CPI fell, down 0.1% for the first time since June of 2020. It was also the slowest annual gain since March of 2021. The next FED meeting convenes on July 30th, so we will have to wait and see how these latest figures will impact the results. If you have any questions, do not hesitate to reach out.
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6th Annual Fairfield Police Sunset 5k – Presented by Moneco Advisors
The 6th Annual Fairfield Police Sunset 5K – Presented by Moneco Advisors is set for July 17th. All proceeds will be donated to the Fairfield Police Union Scholarship Fund & the Fairfield Police Foundation. You can run (3.1 mile) or walk (1 mile) course. We were able to increase the number of participants to 1000 this year and do expect to sell out, so don’t delay, sign up today for Fairfield’s most memorable night of the summer! Sponsorship opportunities available via the registration link as well.
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