Major stock indices rallied as the headline consumer price index fell in the month of June.  Still, from a year ago, prices have risen 3.0%.  Markets priced in interest rate cuts beginning in September.  Traders rotated out of technology stocks and into small cap stocks.  The Russell 2000 Index rose 6.0% while the Nasdaq 100 Index rose only 0.2%.

Treasury bond yields fell with the 30-year bond yield at 4.408% and the 10-Year note at 4.199%.  Freddie Mac reported that the average 30-year mortgage rate fell to 6.89%.  Crude oil fell to $82.63 a barrel and natural gas fell to $2.41 per MMBTUs.  The U.S. dollar index fell to 104.12 and gold rose to $2419.70 an ounce.

In economic reports this week:

• The Federal Reserve reported that consumer credit grew at a seasonally adjusted 2.7% annual rate in May.
  • Revolving credit grew at a 6.3% rate.
  • Nonrevolving credit grew at a 1.4% rate.
• The Commerce Department reported:
  • Wholesale inventories rose 0.6% in May.

• The Treasury Department reported that in the month of June, revenues were $466BN and expenditures were $532BN.
  • For fiscal 2024, revenues were $3754BN and expenditures were $5022BN.
• The Labor Department reported:
  • The consumer price index fell 0.1% in June and was up 3.0% from a year ago.
    • Core prices, excluding volatile food and energy, were unchanged in June and were up 3.3% from a year ago.
    • Gasoline prices fell 3.8% in June after falling 3.6% in May.  From a year ago gasoline prices have fallen 2.5%.
    • Food prices rose 0.2% and were up 2.2% from a year ago.
    • Electricity prices were down 0.7% in June and were up 4.4% from a year ago.
    • Shelter costs were up 0.2% in June, following a 0.4% increase in May and are up 5.2% from a year ago.
    • New vehicle prices fell 0.2% in June and are down 0.9% from a year ago.
    • Used car prices fell 1.5% in June and are down 10.1% from a year ago.

              Source:  U.S. Department of Labor

• • The producer price index for final demand rose 0.2% in June and is up 2.6% from a year ago.
    • Services rose 0.6%.
    • Goods fell 0.5%.

              Source: U.S. Department of Labor

• • Seasonally adjusted first-time claims for unemployment were 222,000, a decrease of 17,000 from the previous week’s revised level.
    • The 4-week moving average of claims, designed to smooth out volatility, was 233,500, a decrease of 5,250 from the previous week’s revised level. 
    • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
• The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf .  Also, the EIA reported in the prior week:
  • Field production of crude rose from 13.2MM BPD to 13.3MM BPD.
  • Natural gas storage rose 65BN cubic feet and is above the highest level during the past five years at this time of year.
• Baker Hughes reported the number of oil rigs fell 1 to 478 and the number of natural gas rigs fell 1 to 100.
• Earnings insight reported 2^nd quarter earnings with 5% of the S&P 500 reporting the blended earnings increase was 9.3%

Please call us if you have any questions.

Loren Rex – Emeritus

Erik A Smith, AIF® – President & C.E.O.

These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).

Sources:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

https://ir.eia.gov/ngs/ngs.html

https://www.freddiemac.com/pmms

https://www.wsj.com/market-data?mod=nav_top_subsection

https://bakerhughesrigcount.gcs-web.com/na-rig-count

https://www.census.gov/economic-indicators

https://www.bls.gov/news.release/pdf/cpi.pdf

https://www.bls.gov/news.release/pdf/ppi.pdf

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_071224.pdf