In this week's episode of Money Wise, Jeff kicks off the episode by providing a detailed market performance summary. The Dow Jones Industrial Average rose by 287 points (0.7%), while the S&P 500 dropped by 110 points (2%) and the NASDAQ fell by 672 points (3.6%). Year-to-date, the Dow is up 6.9%, the S&P 500 has increased by 15.4%, and the NASDAQ is up 18.1%. The Money Wise guys discussed their cautious outlook due to recent significant run-ups, advising listeners to use a dollar-cost averaging strategy, particularly during historically weaker months like August and September. The market's downturn later in the week was attributed to negative comments from President Biden and former President Trump regarding trade with China and Taiwan.

The conversation also highlights the dominance of a limited number of tech stocks driving much of the market's performance, such as NVIDIA, up 144.5% for the year, and other high performers like Netflix and Broadcom. The guys expressed skepticism about the sustainability of this narrow leadership, suggesting a broader market correction might be imminent. They noted early signs of market rotation, with money moving from large-cap tech stocks into small and mid-cap stocks, potentially broadening the market's performance base. This rotation could help sustain the bull market, provided it continues.

Market seasonality refers to the predictable patterns and trends that occur at specific times of the year in the stock market. These patterns are often influenced by historical data, economic cycles, and investor behaviors. For example, the months of August and September are historically weaker periods for market performance, often experiencing lower returns or increased volatility. Understanding market seasonality is important because it helps investors anticipate potential market fluctuations and adjust their strategies accordingly. By recognizing these seasonal trends, investors can make more informed decisions about when to enter or exit positions, manage risk, and optimize their portfolios for better long-term performance.

In the second hour today, the Money Wise guys give their take on the RIA vs Broker debate. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.

The Money Wise guys are back in the studio after a break and as always, they start with an an overview of Wall Street’s performance. The Dow Jones Industrial Average saw an increase of 645 points, or 1.6%, while the S&P 500 was up by 48 points, or 0.9%. The NASDAQ also experienced a rise, gaining 46 points, or 0.2%. Year-to-date, the Dow Jones is up 6.1%, the S&P 500 has increased by 17.7%, and the NASDAQ has surged by 22.6%. During the week, significant market activity was observed, including intraday all-time highs for both the Dow Jones Industrial Average and the NASDAQ, although neither closed at those highs. The discussion pointed out the ongoing dominance of big-cap tech companies in driving market performance, with the NASDAQ up 22.6% by mid-July. The conversation also touched on Federal Reserve Chairman Powell’s recent testimony and a lighter Consumer Price Index report, which initially boosted market sentiment.

Interestingly, there was notable profit-taking in large-cap tech stocks, with the sale volume indicating computer program trading. This profit-taking benefitted smaller asset classes, like small caps and mid caps, leading to a significant day for diversified portfolios. One standout statistic was the performance differential on Thursday between the Russell 2000 (small cap index) and the NASDAQ, marking the largest such difference since 1986. However, there was no follow-through on Friday, with investments shifting back into large-cap leaders. The market cap-weighted S&P 500 outperformed its equally weighted counterpart, with the former up nearly 18% for the year compared to the latter's 7%. The Russell 2000, though improved, still lagged significantly behind, highlighting the ongoing performance gap.

The Money Wise guys are back in the studio and kicking off this week’s episode with an update on the financial markets for the week, year-to-date, and the second quarter of 2024. For the past week, the Dow Jones Industrial Average was down about 0.2%, the S&P 500 was up 0.1%, and the NASDAQ led the pack, rising 0.7%. Looking at the year-to-date performance, the Dow Jones Industrial Average is up 3.7%, the S&P 500 has increased by 14.7%, and the NASDAQ is up 18.7%. For the second quarter of 2024, the Dow Jones saw a decline of 1.73%, while the S&P 500 grew by 3.92%, and the NASDAQ once again led with an impressive 8.26% increase. The guys highlight the significant contribution of tech and AI-related stocks to the S&P 500's performance, noting that NVIDIA alone accounted for more than 30% of the S&P 500's return year-to-date. They also emphasize the importance of a balanced portfolio and mention that despite NVIDIA's 150% rise and Microsoft's 19.97% increase, Apple has lagged with a 10.6% gain.

The discussion moves on to the concentration of returns in a few key stocks, similar to the "magnificent seven" in 2023. This year, companies like Google, Amazon, Meta, NVIDIA, and Microsoft are driving returns, especially those involved in AI hardware. The Money Wise guys mention recent portfolio adjustments, including taking profits from AI hardware stocks like NVIDIA and Broadcom, and reallocating towards AI software companies such as Salesforce and ServiceNow, which have shown negative performance year-to-date, offering attractive valuations for long-term investments. As the market enters the second half of 2024, they question whether there will be a broader market participation beyond the few leading stocks, which have been trading below their moving averages.

AI has significantly impacted the markets by driving substantial growth, particularly in the technology sector. Companies involved in AI development, such as NVIDIA, have seen remarkable stock price increases, contributing disproportionately to the overall market performance. This concentration of returns has made tech and AI stocks key drivers of major indexes like the S&P 500. As investors recognize the transformative potential of AI, both hardware and software companies in this space have attracted significant attention and investment, highlighting AI's critical role in shaping market trends and influencing investment strategies.

In the second hour today, the Money Wise guys share 5 Things Every Portfolio Should Have. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.