Strong First Half of 2023, Gives Way To An Uncertain 2nd Half

Investors enter the final week of the first half of 2023 after a huge start to the year

Author

Mark Roussin
June 26, 2023

Welcome to the 39 new subscribers who joined The Dividend Investor’s Edge, the premiere investing newsletter for those looking to keep up with the stock market and dividend stocks. We now have a community of more than 9,800 subscribers striving to be better and more well informed investors. If this is your first time reading, but you have not yet subscribed, join our growing investing community of like-minded investors looking to reach financial independence.

Webull is an investing platform for investors of all levels. The platform has a lot of useful tools to make the process of investing simple and easy. Right now they have a special promotion that could earn you up to 12 FREE stocks valued up to $30,000. You can receive this promotion just by OPENING a new account and depositing ANY amount of money.
Click HERE to take advantage of this special time promotion.
*This is sponsored advertising content.

Market Talk ⏪

We always begin with 5 important topics from the week prior and/or related to the week ahead for investors to be mindful of. If you could LIKE the article it would be greatly appreciated.

  1. All major indexes in the red last week. Last week was a rarity, especially in 2023 when we saw all four major indexes, including the Russell 2000 ended the (short) week in the red. The Russell 2000 was the worst performing of the four, ending the week down 2.87%, followed by the Dow Jones Industrial Average falling 1.67%. Year-to-date however, all four indexes are in the green, but the DJIA is only up 1.75%. How half two will end is certainly up for debate.

  2. Stronger market allows Fed to continue raising interest rates. As I mentioned last week, although the Fed paused in the latest meeting, choosing to keep interest rates at the same level, it does not mean they are done. Even though the market was down last week, it is up substantially to start the year, which gives the Fed some more wiggle room to continue hiking rates if unemployment and CPI remains stagnant. This past week, we heard from numerous Fed officials, including Jerome Powell, who again made mention of ongoing rate hikes. The Fed gets some fresh inflation data this week when we see what the May core personal consumption expenditures index is, which is the Fed’s preferred gauge, even though it is older data. Economists expect MoM growth of 0.3% and YoY growth of 4.6%.

  3. Student Loan repayments begin in October. After a 3-year hiatus, those with student loan are back on the hook for making payments beginning in October. We spoke about this in recent issues, but now we know a more specific date. This is largely expected to have at least some impact on the economy. The average payment is around $354, which takes away money for discretionary type things, which could also help bring down inflation.

  4. Homebuilders are gaining confidence. Year-to-date, one of the best performing industries has been homebuilding. Not a lot was expected from the industry this year, but instead we are seeing the SPDR S&P Homebuilders ETF up over 25% to start 2023. Lennar, Carrier Global, and Pulte Group are the three largest positions within the ETF. During the most recent week, we saw US housing starts jump unexpectedly by 22% to an annualized pace of 1.63 million. Analysts were expecting 1.4 million units to start, so it was a huge beat. This was the largest reading since 2016.

  5. Certain Sectors appear extremely overvalued. It is no secret that the Technology sector has been the leader thus far in 2023. Will it continue or is it time to take a breath? We have seen huge multiple expansion from many different technology companies, small and large, but the earnings needs to catch up before it is warranted. However, the next few quarters could see negative GDP growth, which could throw cold water on this market surge, at least in the near-term. However, many different sectors have remained quite resilient thus far. For me, I am not looking to put fresh money in this sector at current levels.

Deep Dive 📰

Become a PREMIUM subscriber today for LESS than $1 per day and take your investing to the next level. Premium subscribers receive the following:

  • Monthly Portfolio Updates

  • 2 Individual Stock Deep Dives Per Month

  • Valuation Dashboard

  • Subscriber only content

Subscribers will be receiving the next round of Deep Dives this week.

Go PREMIUM today!

US Markets 🇺🇸

Here is a performance summary for US Equities:

Here is a look at US Treasuries:

The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.

The Fear and Greed Index moved lower, barely, into the GREED section, as the stock market has had a strong first six months of the year. Currently, the index has a reading of 74, which is in line with the prior week reading of 82.

Earnings on Deck 💰

Earnings season is pretty much over, as such, we get another slow week of earnings releases with a few notable names. Here is a look at who's reporting this week:

Dividend News 📝

Here are some notable analyst upgrade/downgrades from the previous week:

  • Citi upgrades Philip Morris to buy from neutral

  • Bernstein upgrades Kellogg to market perform from underperform

  • Bank of America downgrades Dow to underperform from neutral

  • Deutsche Bank adds a catalyst call buy on Walgreens

  • Morgan Stanley downgrades Alcoa to underweight from equal weight

  • JPMorgan Chase adds a negative catalyst watch on Target

  • Jefferies upgrades Principal Financial to buy from hold

Economic Data This Week 📆

Monday

  • None

Tuesday

  • Durable goods orders (May)

  • S&P Case-Shiller Home Price Index (April)

  • New home sales (May)

  • Consumer confidence (June)

Wednesday

  • Wholesale Inventories (May)

Thursday

  • Initial jobless claims (week ending June 24)

  • GDP first-quarter final read

  • Pending home sales (May)

Friday

  • Personal consumption expenditures index (May)

  • Consumer sentiment (June final read)

Other Resources 📺

If you have not done so yet, check out my growing YouTube community where I publish weekly videos focused on building wealth through investing.

Here is the latest video I released: Ranking 5 Dividend Kings From HIGHEST Quality to Lowest:

Here is another video I put out last week: 3 of the BEST Dividend Growth Stocks:

Here are a few others of my latest videos:

If you enjoyed the newsletter, leave a LIKE and COMMENT down below. Also, if there is someone that could benefit from this newsletter, consider sharing it.

Have questions? You can email me directly at [email protected].

Happy Investing!

Mark

Reply

or to participate.