This week, the major indexes look to finish mixed, with the tech sector down on the week, the Dow Jones Industrial Average looks to finish slightly up. While capital was seen moving out of tech, cyclical and defensive stocks such as Eli Lilly saw gains. Notable market impacts have included new information from the first Federal Open Market Committee (FOMC) meeting last week, a slight semiconductor sell-off, and new economic data reported on Thursday.
Last week, we saw the first FOMC meeting under Kevin Warsh’s chairmanship. The committee voted unanimously to keep rates within the range of 3.5% to 3.75%, with the potential for a rate hike later this year. This decision comes after a period of higher energy prices due to the Iran conflict. Warsh also announced the creation of five task forces designed to overhaul how the Fed operates. The five main areas the forces will focus on are communications strategy, balance sheet management, inflation framework, economic data practices, and productivity and technology. It was also made known that Warsh would abstain from submitting his dot-plot projections, which are the central bank’s guidance on future rates. Of importance to consumers, Warsh reiterated the Fed’s long-held 2% inflation target, which has not been seen in over half a decade.
In corporate news, it was announced last week that Fox bought Roku for $22 billion. This deal will provide Fox with access to more than 100 million households that use Roku’s platform. The deal would make Fox the third-largest player in TV viewing, behind only YouTube and Disney. Overall, this deal will allow Fox to rely more on streaming and targeted advertising, rather than on traditional cable and satellite providers. In other corporate news, semiconductor company Micron Technology made headlines on Wednesday with a blowout earnings report. The company reported record revenue and earnings growth while raising its guidance for the rest of the year. This is a strong sign for the semiconductor sector overall, as demand for building AI infrastructure is still heating up.
In economic news, the Personal Consumption Expenditures (PCE) index climbed to 4.1% year-over-year, meeting expectations and up from 3.8% last month. Core PCE Index rose 3.4% annually, meeting expectations and up from 3.3% last month. However, the good news is that economists agree that inflation has most likely peaked following a preliminary peace deal between the US and Iran. With the Strait of Hormuz reopened, oil is now down to almost pre-war levels, with Brent crude at $72 a barrel. Among other positive news were the readings of consumer spending and gross domestic product (GDP). Personal consumption rose to 0.7% from 0.4% last month, and GDP came in at 2.1%, beating estimates of 1.7%.
In closing, I turn to the World Cup. The opening weekend set new broadcast records across multiple markets, with over 50 million viewers tuning in to watch the action across the host nations: Canada, Mexico, and the United States. Last year, a grand total of roughly 5 billion people tuned in, and this year, projections show the television and digital audience will be over 5.5 billion. Notable moments so far in the tournament have been Ecuador’s stunning last-minute upset against Germany and Lionel Messi setting a new all-time World Cup scoring record. Another headline moment occurred when Turkey upset the US, winning 3-2. However, the USA secured wins over Paraguay and Australia, propelling them to the knockout stage, where they will face Bosnia and Herzegovina on July 1.
Ryan Motsinger
Licensed Investment Advisor Representative Research & Trading Specialist | Harvest Financial Advisors, LLC | 513.779.3030 | 800.361.0329