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Mid-Week Market Review: CPI, the Fed, and a Stressed Economy

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Today is Wednesday, June 12th, 2024 and here’s our mid-week market review.

This morning, we’re all eyes on the May CPI Report, set to be released shortly. It’s expected to provide critical insights into the current inflation trends.

Additionally, the Federal Reserve is meeting today to announce any new rate changes. The outcome of this meeting could have significant implications for the markets.

In market news, the S&P 500 hit a new record high yesterday, signaling strong performance despite economic uncertainties.

On the corporate front, Dick’s Sporting Goods has its earnings call today, and Adobe’s earnings report is scheduled for release tomorrow. These reports will be closely watched by investors for signs of corporate health and consumer spending trends.

Also notable is Nvidia’s 10-for-1 stock split that took effect on Monday, making its shares more accessible to a broader range of investors.

Now, let’s move to our watchlist. We have AMD and CVS in focus. AMD finished in the red yesterday, closing at $158.96. CVS, which made our Chart of the Day yesterday, continues to trail through multi-year support levels, indicating persistent challenges.

In the Non-energy minerals sector, major players like BHP Group, Southern Copper, and Nucor Steel continue to struggle, showing red for the month, week, and day. This sector is clearly facing headwinds.

Financial services aren’t faring much better. Wells Fargo is down over 6% for the month and closed 1.38% lower yesterday. Goldman Sachs also saw a drop, down 2% yesterday. The financial sector remains under pressure.

On a more positive note, technology and electronics sectors are outperforming the market. Apple is up 11.2% for the month, and Meta has risen over 8% for the same period. These sectors are showing resilience and growth.

However, the Industrial Services Sector has been consistently finishing in the red over the last month, indicating potential underlying issues that need addressing.

To understand how these market sectors impact the overall economy, let’s dive a bit deeper.

Starting with the Non-energy minerals sector, which includes companies involved in the extraction and processing of minerals. When this sector is in decline, as we’ve seen with BHP Group, Southern Copper, and Nucor Steel, it often signals reduced industrial activity and lower demand for raw materials. This can be a harbinger of economic slowdown, as these materials are fundamental to manufacturing and construction.

Banks like Wells Fargo and Goldman Sachs are crucial to economic stability. Their performance reflects the health of credit markets and consumer confidence. A decline in this sector can indicate tightening credit conditions, reduced lending, and potential slowdowns in both business expansion and consumer spending.

On the flip side, the technology and electronics sectors are often seen as growth drivers in the modern economy. Companies like Apple and Meta not only generate significant revenue but also spur innovation and productivity gains across other sectors. Their strong performance can bolster overall market sentiment and encourage investment in new technologies, leading to economic growth.

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