The Dividend Cafe - The Dividend Cafe Wednesday - July 17, 2024

Episode Date: July 17, 2024

Today's Dividend Cafe discusses the mixed outcomes in the market, focusing on the performance of the Dow, S&P, and NASDAQ. Key topics include technological sell-offs due to tariff talks, outperformance of value stocks, and updates on economic indicators such as housing starts, building permits, and industrial production. Additionally, Brian provides insights into what to expect from tomorrow's economic releases and Fed speakers. 00:00 Introduction 00:06 Market Performance 00:32 Technology Sector 00:58 Value Stocks and Small Caps 01:46 Housing and Industrial Production Updates 02:59 Upcoming Economic Indicators 03:14 Conclusion Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Welcome to Dividend Cafe. It is Wednesday, July the 17th. In what was another mixed day today, actually, in markets, the Dow ended up closing up 250 plus points, 253 points on the day. The S&P was down 1.4, almost 1.4 percent, and the Nasdaq was down 2.77 percent. So a big sell-off in technology. The point drop, actually, on the Nasdaq was over 500 points lower. So double that of the Dow positive was the Nasdaq lower. So quite a disparity in returns. Part of that was tariff talk, both from Trump, but also Biden on imports from China,

particularly in the semiconductor space, which is that technology sleeve, which is more Nasdaq heavy. And so that's what saw a large part of the sell-off today in that part of the market. But it's another relative outperformance technically technically, for the equal-weighted S&P versus the cap-weighted. It's over 100 basis points on the day. That's the second day in a row. And you've got things like value stocks, cyclicals, small caps all outperforming. And I wrote about this a little bit in What's on Brian's Mind. But there are times, in fact, most times when rate cycles go the other way, meaning they start cutting interest rates, things like small caps actually underperform by an average of about 7%. But a lot of that is because those time periods tend to be

associated with recessionary periods. And the times that aren't recessionary, meaning the Fed cuts rates and we're not in negative growth trajectory. Technically, small caps have done better. So food for thought. It's too early to call anything on an official rotation being lasting, but I'm just pointing out some pretty big relative differences in what's going on inside of the market. And we've spoken about it quite a bit. We've had some in the economic calendar. We had housing starts for the month of June up 3% for the month. We had building permits, which is more forward-looking in housing, up 3.4% on the month of June. Both of those were better than expectations. So a tick up in housing, year-over-year numbers in both of them are lower,

so they're meaningfully negative, 4% plus year-over over year. But what you're starting to see now is interest rate expectations now priced lower is that things like forward-looking housing, building, and permits starting to look a little bit better there. We also had industrial production for the month, 0.6%. We were only expecting 0.3, so it's double. This is positive for GDP, for manufacturing. And then you also had the May number on industrial production get revised higher to 0.9%. And technically, between the two months, May and June, that's the best two-month period we've had since 2021. So far, you're getting decline in inflation rates. You're getting positive market action, at least in part of

the market. You're getting a rotation, you're getting interest rate sectors starting to perform better. And all that is somewhat logical, frankly. We'll see how this thing plays out over time. But tomorrow, we've got the Philly Fed Manufacturing Index to look at. We've got some initial jobless claims and then various Fed speakers to listen to and to walk through. We also have the Beige Book, by the way, that came out later this afternoon that I'll go through tomorrow with you. For that, I'm going to let you go for the evening. That's your brief Dividend Cafe daily update. Please reach out with your questions. We appreciate them, and we'll talk to you soon. Thank you. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC,

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