The Dividend Cafe - The Dividend Cafe Wednesday - June 5, 2024

Episode Date: June 5, 2024

Exploring the Dynamics of the Dow This episode delves into the intricacies of the Dow Jones Industrial Average (DJIA), commonly referred to as the Dow. The show offers insight into its components, historical significance, how it is calculated, and its role as an economic indicator. Listeners will learn about the major influences on the Dow's movements, its impact on market trends, and why it is closely watched by investors and analysts. 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, June the 5th, in what was generally a fairly positive day across the board in markets. Dow closed up 96 points, but the S&P and the NASDAQ were both up over a percent. In fact, the NASDAQ was up almost 2% on the day, and both of those indices closed at all-time highs. A lot of that was around a continued just juggernaut of artificial intelligence, and some of these very large now names, including the largest of them at now a $3 trillion market cap, really moving the needle on the overall indices, but positive across the board in stocks. And you also had a rally in bonds

and 10-year was up four basis points, or I'm sorry, down four basis points on the day. We closed at 428 on the day. And the two-year is now below 475. We closed at 472, and that's down 25 basis points from a week ago. So you are seeing some interest rate movement lower, which again is supportive of some risk assets otherwise. And some of the reason is some of the economic data has started to slow, including today. We had an ADP private payroll number come in weaker than expected at 152. We were expecting more like 175. And so we had some employment coolness on the day. We did get some strength in services though, I will note, quite robust.

We got an ISM, services manufacturing PMI number at 53.8 versus a 50.7 expected. So that's anything over 50 is an expansion territory. Those are good things. Service sector is powering the economy now, making up the lion's share of it. And so we want to see that expanding. If we can get that expansion with a normalized employment market and inflation coming down, then there's your porridge is just right. And I suspect some of that was behind today's move positive in markets. There was a question about a mixed shelf offering when companies do this. And is it a good

or bad thing for the stock price? Anytime you have a meaningful announcement of shareholder stewardship, then yes, it can move shares either up or down. But a mixed shelf is just a way for a company to issue multiple type of securities at the same time. So they want to issue common stock and also debt and also derivatives like warrants. They can do that under one offering, not necessarily good or bad. I suppose it depends on what they're using the money for that they're raising. If it's deemed to be proper stewardship and adding shareholder value, then there's nothing wrong with that. And frankly, that's what capital markets are for. But hopefully that answers your question fine there. Tomorrow, we will have initial jobless claims, and we'll have trade numbers out. Again,

obviously, a deficit. Trade deficit numbers will be out tomorrow. So we'll have some more to chew through in the economic data. But overall today, we'll take today as a positive, and I shall let you go for the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors LLC. This is not an offer to buy or sell securities. No investment process is free of risk. There is no guarantee that the investment process or investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance Thank you. referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice. This document was created for informational purposes only. The opinions expressed are solely those of the Bonson Group and do not represent

those of Hightower Advisors LLC or any of its affiliates. Hightower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client's individual circumstances Thank you.