Happy Friday!
This morning’s strong jobs report appears to delay the Fed’s interest rate cuts, but will it derail the stock rally? Nvidia crosses $3 trillion and tops Apple as the second most valuable public company. A new national stock exchange in Texas plans to compete with NYSE and Nasdaq. Summer tip: art is good for your health.
#1 – Weekly Market Recap – Stocks climbed this week until this morning’s jobs report speed bump.
Through Thursday, the S&P 500 and the NASDAQ climbed to all-time highs while Nvidia became the third company in history to reach $3 trillion in value.
Prior to trading this morning, the NASDAQ was up +2.8%, the S&P +1.4%, and the Dow Jones +0.5%.
Earlier this week, stocks rallied as the interest rate on the 10-Year Treasury bond fell partly because of Tuesday’s weaker jobs report. The JOLTS (Job Openings and Labor Turnover Survey) report for April 2024 showed a decrease in job openings to 8.059 million, down 296,000 from the previous month. This was the lowest level of job openings since February 2021. Investors welcomed the softer jobs number as supportive of a Federal Reserve interest rate cut.
Investor optimism was more muted this morning as May’s non-farm payrolls rose by 272,000 jobs, far exceeding expectations for 180,000 new jobs and April’s 165,000 new jobs added to the economy. Average hourly earnings also advanced faster than expected at 0.4% versus the estimated increase of +0.3%. The unemployment rate ticked higher to 4% from 3.9% in April.
As shown in the chart below, the monthly payroll numbers can be quite volatile, so investors may not want to fixate on May’s single month’s report. Additionally, there appears to be a continued trend of rising unemployment (green line). If this trend continues, it could provide the Federal Reserve sufficient justification that an interest rate cut is in order…perhaps just not as soon as investors would like.
Earlier this week, both the Bank of Canada and The Bank of England cut interest rates for the first time this cycle. Prior to this morning’s blowout jobs report, investors were anticipating that the Federal Reserve was going to signal rate cuts at their meeting next week.
Instead, investors’ attention will focus next week on May’s CPI report and the tone of the Federal Reserve’s comments after next Wednesday’s meeting.
Overall, it appears that investors will need to remain patient with the “data dependent” Federal Reserve as it may not signal its first rate cut until later in the year…possibly after November’s Presidential election.
#2 – New #2 – On Wednesday, Nvidia (NVDA) surpassed Apple (APPL) to become the second most valuable company in the world.
With the move above $3 trillion in value this week, Nvidia becomes just the third company in history to accomplish this feat. Apple was the first company to reach $3 trillion in market cap in June 2023 and Microsoft crossed the $3 trillion threshold in January of this year.
So far this year, shares of Nvidia have advanced 144% and the value of the chip giant has risen from approximately $1.2 to $3 trillion. Nvidia has been the major beneficiary of an Artificial Intelligence (AI) investment wave (see our May 24th article (Week in Review Memorial Day, Musical Monopolies, and Man’s Best Friend).
As of Thursday’s market close, Nvidia trailed Microsoft by just 6% for the world’s most valuable company. Interestingly, the last company not named Apple or Microsoft to hold the title of “Most Valuable Company” (other than a brief stint by Amazon in January 2019), was Exxon Mobil in the summer of 2013. At that time, the iPhone 5 was the latest smartphone model, Adrian Peterson was the reigning NFL MVP, and the final season of Breaking Bad was airing on television.
Which company will be the first to reach $4 trillion in value?
Source: Forbes
#3 – Texas Takes on Wall Street – A newly formed National stock exchange, based in Dallas, is looking to compete with the New York Stock Exchange (NYSE) and Nasdaq.
The TXSE Group, backed by more than two dozen investors including industry heavyweights Blackrock and Citadel, have announced plans to file for registration with the US Securities and Exchange Commission later this year. The group has more than $120 million in funding making it the most well-capitalized exchange to ever file with the SEC.
The TXSE Group hopes to officially launch its exchange in 2026. “We’re thrilled to bring to fruition the long-held vision for a national stock exchange in Texas,” TXSE Group founder and CEO James Lee said in a statement this week. “Texas and the other states in the southeast quadrant have become economic powerhouses. Combined with the demand we are seeing from investors and corporations for expanded alternatives to trade and list equities, this is an opportune time to build a major, national stock exchange in Texas.”
There were more than 8,000 companies listed on US stock exchanges in 1996. According to data from the Center for Research in Security Prices, there are about half as many companies publicly listed in the US currently. The reduction in public listings is not because there are fewer companies. Rather, companies are opting to stay private and avoid the regulation and scrutiny that accompanies being a publicly traded company.
The TXSE Group is hoping to benefit from the more than 5,200 private equity held companies in the southeast region that may want to go public.
The most popular US stock exchanges, NYSE and Nasdaq, are both located in New York City. There are, however, about 13 other exchanges located around the country including in Philadelphia and Miami. According to Lee, the TXSE would mostly list businesses located in Texas and in the southeastern part of the US.
Source: CNN
#4 – Health Benefits of Art – According to experts, creating or appreciating art can improve your health.
Most people don’t pick up a paintbrush or go to a museum for the health benefits – but it may be time to start.
Research has shown that art experiences, whether as a spectator or creator, can improve our brains and our bodies in effective and measurable ways.
The power of diverse arts experiences to promote healing, well-being, and even longevity, provide benefits that rank right up there with exercise, nutrition and sleep, states Susan Magsamen in her book co-authored with Ivy Ross, “Your Brain on Art: How the Arts Transform Us.”
Magsamen and Ross offer compelling research that shows how, whether you’re a novice artist or a Picasso, engaging in an art project of any kind for 45 minutes lowered the stress hormone cortisol by as much as 25%. According to Magsamen, art can push us beyond our comfort zone helping to form new neural pathways that might not otherwise develop in our day-to-day life. Seeing incredible architecture can evoke a sense of awe and wonder; similarly, art and music alter our moods, taking us outside of ourselves says Magsamen.
Health care professionals are beginning to understand that like exercise and nutrition, if you engage in the arts routinely, it can support your overall health.
Source: CNN
Source: Amazon
Have a great weekend!
Denver & the DSGCA Team