Click Here to Watch the Interview: Brent & Brad Chappell

Insights on Transitions, Independence & Advisor Growth

About this episode…

Many successful people attribute their achievements to having a great mentor.

For Brent and Brad Chappell, their father was a “childhood hero who became their business mentor.”

Robert Chappell founded his wealth management practice at Merrill in 1984, when being part of the “Thundering Herd” was like being part of a much larger family.

The brothers proudly reminisce about the influence Robert and his work at Merrill had on them, so it was no surprise when Brent and Brad joined the firm in 2002 and 2006, respectively.

The Chappells’ early experience at Merrill was one of two families blended together. Yet that kinship diminished after the firm’s sale to Bank of America, and the team’s ability to serve clients and conduct daily business became challenged.

Like many successful wirehouse teams, the Chappells credit the firm for being the foundation of their family business. But they saw the handwriting on the wall, and it said that they owed it to themselves and their clients to explore their options.

In February 2023, Brent, Brad, and their team left the firm their father retired from and launched Chappell Wealth Management as one of the largest teams on the Sanctuary Wealth supported independence platform.

In this episode with Louis Diamond, Brent and Brad talk about their journey and motivations, including:

• Growing up with Merrill—and what changes they witnessed over the years.
• Their unique perspective as next gens in a family business—and when it became clear that “what got them here wouldn’t get them there.”
• The economics of a move to independence—and how they reconciled the fact that they would owe money back on their father’s CTP agreement.
• Their exploration and transition process—and why “education” was one of the most valuable facets.
• Plus, what it really takes to build a $1B+ business.

Listen in as they candidly share a unique narrative about a changing wirehouse world, family dynamics, succession, and building a strong business designed to achieve long-term enterprise value.

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June 2024 Market Summary: Equities Continue Higher, Rising Unemployment & Lower Treasury Yields

 

Equities continued their positive streak in June to close out the first half of the year. The Dow Jones Industrial Average edged 1.2% higher in June, the S&P 500 advanced 3.6%, and the NASDAQ surged 6%. It was a much better month for large-caps; the Russell 1000 index gained 3.3% while the small-cap Russell 2000 index lost 0.9%.

 

Despite the broad index gains, only five of the eleven sectors contributed to the positive month for equities. The gains were largely led by Technology’s 7.8% increase, followed by Consumer Discretionary at 3.9% and Communication Services at 3.2%. On the opposite side of the spectrum, Utilities went from first to worst with a 5.6% decline.

 

Unemployment topped 4% for the first month since January 2022, and the labor force participation rate fell to 62.5%. Both new and existing home sales slipped in June, yet the U.S. median existing home sales price set another all-time high. Inflation continues to hover at the lower end of the 3-4% range, while core inflation logged another monthly decline.

 

Treasury yields dropped across the board with the exception of the 3-month T-Bill. The 5-year Treasury note endured the largest decline on the curve for the second straight month, shedding another 19 basis points. T-Bill instruments saw minimal movement. For the third straight month, the 2-year, 3-year, 10-year, 20-year, and 30-year all decreased by double-digit basis points.

 

Bond funds benefitted from added gains as a result of the lower yields. The iShares 20+ Year Treasury Bond ETF (TLT) advanced 1.81%, the largest increase of any bond fund tracked on our chart.

 

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Chappell Wealth Watch! 2024 Halftime Report

 

2024 is flying by, with the first of the year already in the books.

Long-equity investors have had a solid year so far. In the first six months of the year, 60% of S&P 500 constituents were positive, helping power the index higher by 14.5%.

Of the 303 positive S&P 500 constituents, some top performers in the first half of 2024 include:

• Super Micro Computer (SMCI), up 187%
• NVIDIA (NVDA), up 150%
• Carnival (CCL), which roared 24% higher in June alone to get back to even.

Of the 200 negative constituents, laggards in the first half of the year include:

• Walgreens Boots Alliance (WBA), down 54%
• Lululemon Athletica (LULU), down 42%
• Intel (INTC), down 38%.

 

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Equity Performance: Stocks Edge Higher, Nasdaq Leads Way

Major Indexes

 

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Value vs. Growth Performance

 

 

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US Sector Movement

 

 

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Top 10 S&P 500 Performer

 

 

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10 Worst S&P 500 Performers

 

 

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Economic Data Overview: Unemployment Tops 4%, New Home Sales Plummet while Prices Reach All-Time High

Employment

May’s unemployment rate reached 4% for the first time since January 2022. At the same time, labor force participation rate slipped 0.2 percentage points, down to 62.5%. Nonfarm payroll data showed 272,000 new jobs were added in May, a solid rebound from last month’s miss and surpassing economist expectations of 185,000 jobs.

Consumers and Inflation

May’s US inflation figure registered at 3.27%, a decline of under one-tenth of a percentage point and the eleventh consecutive month that YoY inflation has hovered in the 3 to 4 percent range. Core Inflation lowered to 3.42%, marking the 13th monthly decline in the last 14 months. The US Consumer Price Index was flat MoM, and US Personal Spending rose a quarter of a percent. The Federal Reserve held its key Fed Funds Rate at 5.50% at its June 12th, 2024 meeting, marking the seventh consecutive meeting in which the Fed left rates unchanged.

Production and Sales

The US ISM Manufacturing PMI stayed in contraction territory for the third straight month, slipping another 0.2 points in June to 48.50. The YoY US Producer Price Index for May was 2.24%, the second consecutive month above 2% since April 2023, while April US Retail and Food Services Sales were up 0.09% MoM.

Housing

US New Single-Family Home Sales plummeted 11.3% in May, while US Existing Home Sales were down a much lighter 0.7% MoM. Despite the overall contraction in housing demand, the Median Sales Price of Existing Homes rose another 3.1% and set a new all time high of $419,300. Mortgage rates fell for the second straight month; as of June 27th, the 15-year Mortgage Rate lowered to 6.16% and the 30-year clocked in at 6.86%.

Commodities

The price of Gold traded sideways in June, falling slightly MoM to $2,330.90 per ounce as of June 28th. Crude oil prices surged higher this month; as of June 24th, the price of Brent increased 9.1% to $86.75 per barrel. Despite rising oil prices, the average price of gas fell 14 cents to $3.56 per gallon.

 

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Fixed Income Performance: Insights into Bond ETFs & Treasury Yields

US Treasury Yield Curve

 

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Bond Fund Performance

 

 

May 2024 Market Summary: Equities Bounce Back, Sticky Inflation and Lower Long-Term Treasury Yields

 

Equities returned to winning ways in May following a down April that had stunted three straight months of gains in 2024. The Dow Jones Industrial Average rose 2.6% in May, the S&P 500 advanced 5%, and the NASDAQ surged 7%. EAFE gained 4% in May, while Small Caps bested Large Caps by three-tenths of a percentage point.  Utilities was the best-performing sector for the second straight month, jumping 9% in May. Technology and Communication Services followed with respective gains of 7.1% and 7%. The only negative sector in May was Energy, which slipped 0.3%.

Both new single-family home sales and existing home sales slumped in May; at the same time, the median existing home sales price advanced above $400,000. Inflation remained in the mid-three percent range for the tenth straight month, while US PPI increased to 2.17%. The unemployment rate increased to 3.9%, and April’s job gains were the lowest in seven months.

Yields on mid- to long-term Treasury bonds declined in May while T-Bill instruments saw minimal movement. For the second straight month, the 5-year Treasury note saw the largest movement of any duration on the curve, down 20 basis points. The 2-year, 3-year, 10-year, 20-year, and 30-year all decreased by double-digit basis points, while yields on the 1-month and 3-month T-Bills were unchanged.

Bond funds saw some gains on the back of lower yields. The iShares 20+ Year Treasury Bond ETF (TLT) advanced 2.9%, the largest increase of any bond fund tracked on our chart (below).

 

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Chappell Wealth Watch! Sell in May and Go Away?

 

The old stock market adage of “Sell in May and Go Away” refers to an investing strategy that suggests pulling investments out of the market in May in order to miss the seasonally weaker stock market performance that occurs between May and October.

But to what extent is this adage actually true? And is being uninvested during this period beneficial or harmful over the long-term? We looked at the data behind “Sell in May and Go Away” to find out.

Below is a table showing average S&P 500 returns each month since 1950:

 

While it is true that most months between May and October have historically delivered lower stock market returns versus those between November and April, selling in May and moving to cash for six months each year produced significantly lower annualized returns over the long run as a result of less time in the market.

 

 

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Equity Performance: Stocks Rebound Across the Board

Major Indexes

 

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Value vs. Growth Performance

 

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US Sector Movement

 

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Top 10 S&P 500 Performers of May 2024

 

 

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10 Worst S&P 500 Performers of May 2024

 

 

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Economic Data Overview: Inflation Persists, Home Sales Decline While Values Rise

Employment

April’s unemployment rate inched up to 3.9% while the labor force participation rate remained unchanged at 62.7%. Nonfarm payroll data showed 175,000 new jobs were added in April, the lowest level of job gains since October 2023 and below the expected value of 243,000 for the month.

Consumers and Inflation

April’s US inflation figure came in at 3.36%, marking the tenth consecutive month that YoY inflation has hovered in the 3 to 4 percent range. Core Inflation dropped to 3.61%, the lowest YoY rate since May 2021. The monthly US Consumer Price Index rose 0.31% in April, and US Personal Spending posted a small monthly increase of 0.20%. No changes have been made to the Fed Funds Rate of 5.50% since the most recent FOMC meeting on May 1st, 2024.

Production and Sales

After posting an expansion reading in March for the first time since October 2022, the US ISM Manufacturing PMI slipped another 0.5 points further into contraction territory in May to 48.70. The YoY US Producer Price Index for April came in at 2.17%, the first time above 2% since April 2023 and third consecutive monthly increase, while April US Retail and Food Services Sales were unchanged MoM.

Housing

US New Single-Family Home Sales fell 4.7% in April, while US Existing Home Sales slipped 1.9% MoM. Despite the reduced housing demand, the Median Sales Price of Existing Homes increased 3.7% in April to $407,600. Mortgage rates fell slightly in May; as of May 30th, the 15-year Mortgage Rate lowered to 6.36% and the 30-year came in just above 7% at 7.03%.

Commodities

The price of Gold rose slightly in May to $2,348.30 per ounce as of May 31st following several surges in 2024. Crude oil prices fell MoM; as of May 28th, the price of WTI slipped 3.1% to $80.90 per barrel while Brent recorded a 7.8% downturn to clock in at $81.34 per barrel. As a result, the average price of gas fell 8 cents to $3.70 per gallon.

 

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Fixed Income Performance: Insights into Bond ETFs and Treasury Yields

US Treasury Yield Curve

 

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Bond Fund Performance

 

April 2024 Market Summary: Equities Tumble, Higher Mortgage Rates, and Long-Term Treasury Yield Increases

 

Equities endured a tough April following three straight months of gains. The S&P 500 fell 4.1% in its first monthly decline of 2024, the NASDAQ sank 4.4%, and the Dow Jones Industrial Average tumbled 4.9%. Emerging Markets was the only index on our chart (below) to post a positive gain in April. The Russell 2000 was the worst performer in April, plummeting 7%.

Only the Utilities sector was positive in April. Of the remaining ten sectors, Real Estate was the worst-performing sector, sinking 8.5%, followed by Technology and Health Care which fell 5.8% and 5.0%, respectively.

The 30-year mortgage rate surpassed 7% for the first time in 2024. Housing demand was mixed; new single-family home sales rose MoM but existing home sales fell.  Bitcoin–colloquially referred to as “Digital Gold”–took its first breather of 2024, while the price of physical gold surged to a new all-time high.

Yields on long-term Treasury bonds rose significantly in April. The 5-year Treasury note increased 51 basis points, the most of any duration on the curve. The 2-year, 3-year, 10-year, 20-year, and 30-year all increased by at least 45 basis points, while there was little activity on the shorter end of the curve.

Bond fund performance slumped as a result of the higher yields. The iShares 20+ Year Treasury Bond ETF (TLT) slipped 6.5%, the sharpest decline of any bond fund tracked on our chart (below).

 

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Chappell Wealth Watch! The Market’s Latest Drawdown

 

15 months after a drawdown of over 25%, the S&P 500 fully recovered and proceeded to set new all-time highs in January 2024. The index has fallen by as much as 5.5% and currently sits 4.2% below its all-time high. Is this drawdown simply a breather on the road to more all-time highs, or is more pain ahead?

 

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Equity Performance: Rough Month for Stocks

Major Indexes

 

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Value vs. Growth Performance

 

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US Sector Movement

 

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Top 10 S&P 500 Performers

 

 

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10 Worst S&P 500 Performers

 

 

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Economic Data: Inflation Trends & Commodity Prices

Employment

March’s unemployment rate fell to 3.8% as the labor force participation rate increased to 62.7%. According to nonfarm payroll data, 303,000 new jobs were added in March, marking the first month of U.S. job gains since May 2023 and surpassing estimates that ranged from 150,000 to 250,000.

Consumers and Inflation

US inflation has now hovered in the 3-4 percent range for the last nine months, with March’s figure coming in at 3.48%. This was also the second consecutive monthly increase for YoY inflation. The Core Inflation rate for March was 3.80%, which continues to sit just below 4%. The monthly US Consumer Price Index rose 0.38% in March, and US Personal Spending’s MoM increase of 0.84% was the highest in 14 months. The Federal Reserve held its key Fed Funds Rate at 5.50% at its May 1st, 2024 meeting, marking the sixth consecutive meeting in which the Fed left rates unchanged.

Production and Sales

After posting an expansion reading for the first time since October 2022, the US ISM Manufacturing PMI fell 1.1 points to 49.20, putting it back into contraction territory. The YoY US Producer Price Index came in at 2.09%, the first time above 2% since April 2023, while February US Retail and Food Services Sales increased by 0.7% MoM.

Housing

US New Single-Family Home Sales surged 8.8% MoM in March, but US Existing Home Sales sank 4.3% MoM. Despite the slip in demand for existing homes during March, a strong month in February pushed the Median Sales Price of Existing Homes up 2.5% in March to $393,500. Mortgage rates increased slightly in April; the 15-year Mortgage Rate rose to 6.44% as of April 25th, and the 30-year pushed above 7% for the first time since December 2023, to 7.17%.

Commodities

The price of Gold advanced another 5.8% in April, to $2,343.10 per ounce as of April 26th amid geopolitical tensions, persistent inflation, a weakening dollar, and increased purchasing of the precious metal by central banks. Gold briefly topped $2,400 per ounce on April 12th. Crude oil prices increased slightly in April; the price of WTI ended April at $84.26 per barrel while Brent inched up to $88.44. Despite the muted activity in crude oil, the average price of gas increased 14 cents to $3.78 per gallon.

 

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Fixed Income: Insights into Bond ETFs & Treasury Yields

US Treasury Yield Curve

 

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Bond Fund Performance

March 2024 Market Update: Equity Gains, Manufacturing Expansion & Mega Cap Stocks

 

Equities continued their rally from February with modest gains in March. The S&P 500 rose 3.2% in March, the Dow Jones Industrial Average advanced 2.2%, and the NASDAQ tacked on 1.9%. Small-caps bested large-caps in March, as the Russell 2000 rose 3.6% while the Russell 1000 added 3.2%. In terms of style boxes, however, large-cap value stocks (IWD) had the best month with a 5% gain.

The only negative sector in March was Consumer Discretionary. XLY was in the red by just 0.07%, and this comes after leading all sectors in February with a 7.9% gain. The leader was Energy (10.5%), followed by Utilities and Materials, with gains of 6.6% and 6.5%, respectively.

Existing home sales leaped 9.5% higher in March, while new single-family home sales barely rose. The increase in sale activity lifted the median price of existing homes for the first time in eight months. The ISM manufacturing PMI entered expansion territory for the first time in 18 months. Though inflation increased slightly and core inflation deceased for the 11th straight month, gold surged to a new all-time high.

Treasury yield activity was largely muted this month. The 6-month treasury bill rose eight basis points, the most of any duration. All treasury instruments with durations of 2 years or longer saw their yields fall, but no individual decline was greater than six basis points.

The lack of yield activity translated into little movement among bond fund performances. The iShares iBoxx Investment Grade Corporate Bond (LQD) posted a 1.5% increase, the most of any bond fund on the chart below.

 

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Chappell Wealth Watch! $1 Trillion Market Cap Club Check-in

 

We’re already through one quarter of 2024, so let’s take a look at how the “Magnificent Seven” mega cap stocks have done so far this year.

Microsoft (MSFT) and Apple (AAPL) are trending in exact opposite directions. Microsoft’s share price has steadily risen 11.9% in 2024 and surpassed $3 trillion in market cap. Apple, on the other hand, tumbled below the $3 trillion market cap threshold due to a 10.9% decline in Q1 2024.

Aided by an 82.3% surge in Q1 2024, NVIDIA (NVDA) blew past the $2 trillion mark to a market cap of $2.26 trillion. Both Alphabet (GOOG, GOOGL) and Amazon (AMZN) have had a solid start to the year and are nearly tied in market cap.

Meta Platforms (FB) 37.2% run in Q1 2024 helped welcome the technology conglomerate back into the $1 trillion market cap club. Tesla (TSLA) shares sank 29.3% in Q1, pushing the EV manufacturer down to a market cap of $560 billion.

 

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Equity Performance: Indices Continue Their Rally

Major Indexes

 

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Value vs. Growth Performance

 

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US Sector Movement

 

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Top 10 S&P 500 Performers

 

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10 Worst S&P 500 Performers

 

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Economic Data: Inflation Trends & Commodity Prices

Employment

February’s unemployment rate rose to 3.9% while the labor force participation rate stayed at 62.5% for the third consecutive month. According to nonfarm payroll data, 275,000 new jobs were added in February, beating the expected figure of 200,000.

Consumers and Inflation

The US inflation rate posted a slight increase in February to 3.15%. Inflation has now hovered in the 3-4 percent range for the last eight months. Core Inflation logged its 11th consecutive monthly decline, falling to 3.75% in February. The monthly US Consumer Price Index rose 0.44% in February, and US Personal Spending’s MoM increase of 0.76% was the highest since January 2023. The Federal Reserve held its key Fed Funds Rate at 5.50% at its March 20th, 2024 meeting, marking the fifth consecutive meeting in which the Fed left rates unchanged.

Production and Sales

The US ISM Manufacturing PMI surged 2.5 points to 50.3, reaching expansion territory for the first time since October 2022. February US Retail and Food Services Sales rebounded by 0.6% MoM, while the YoY US Producer Price Index increased by 1.6%.

Housing

US New Single-Family Home Sales slipped 0.3% MoM in February, but US Existing Home Sales jumped 9.5% MoM. The demand pushed the Median Sales Price of Existing Homes up 1.6% in February to $384,500, putting an end to a seven-month streak of declines. Mortgage rates decreased slightly in February; the 15-year Mortgage Rate fell to 6.11% as of March 28th, and the 30-year came down to 6.79%.

Commodities

The price of Gold jumped 8.1% in March on news of possible June rate cuts, even as the dollar and treasury yields climbed. Gold ended the month at $2,214.40 per ounce, and the SPDR Gold Shares ETF (GLD) set a new all-time high as well. Crude oil prices continued steadily higher in March following a trough in December 2023; the price of WTI advanced 4% to $82.41 per barrel while Brent rose 1.9% to $86.18 both as of March 25th. Higher oil prices also pushed the average price of gas 27 cents higher to $3.64 per gallon as of the final week of the month, further forming a “U-shaped recovery”.

 

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Fixed Income: Insights into Bond ETFs & Treasury Yields

US Treasury Yield Curve

 

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Bond Fund Performance

February 2024 Market Update

Equities rallied across the board as the NASDAQ led the way with a 6.2% gain. Both the Russell 2000 and Russell 1000 posted gains of around 5.5%, and the S&P 500 advanced 5.3%. The Dow Jones Industrial Average was the relative laggard but still rose 2.5%.

All eleven sectors advanced higher in February. Consumer Discretionary led the way with a 7.9% gain, followed by Industrials at 7.2% and Materials which charged 6.5% higher.

Core inflation has gradually decelerated over the last 10 months, down to 3.86% in January. Crude oil rose in February, causing the average price of gas to increase 13 cents to $3.37/g. After a flat January, Bitcoin and Ethereum logged respective gains of 45.9% and 44.2% in February, spurred by ETF inflows and ahead of March’s Bitcoin halving event.

Treasury yields rose across the board even as equities rallied. Intermediate duration instruments posted the largest increases; the 2-year, 3-year, and 5-year all increased by 35 bps or more.

Bond ETFs largely mimicked their January performances in February. The short-term SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) and iShares Boxx High Yield Corporate Bond (HYG) both inched higher. In long-term bonds, the iShares 20+ Year Treasury Bond ETF (TLT) fell 2.3% for the second straight month.

 

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Chappell Wealth Watch! S&P Crosses Above 5,000

The S&P 500 reached a major milestone on February 9th when it closed above 5,000 for the first time.

It took the index 48 years to reach 1,000. The time it has taken for the S&P 500 to reach incremental 1,000-point levels has reduced dramatically in recent decades. The S&P 500 increased from 4,000 to 5,000 in just 2 years, 10 months, and 9 days.

 

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Equity Performance

Major Indexes

 

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Value vs. Growth Performance

 

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US Sector Movement

 

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Top 10 S&P 500 Performers

 

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10 Worst S&P 500 Performers

 

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Economic Data

Employment

January’s unemployment rate stayed unchanged at 3.7%, as did the labor force participation rate at 62.5%. The US unemployment rate has now come in at 3.7% for three consecutive months. According to nonfarm payroll data, 353,000 new jobs were added in January, far surpassing the expected increase of 185,000.

Consumers and Inflation

The US inflation rate for January increased slightly to start the year, to 3.09%. Inflation has hovered in the 3 percent range since July, though it just logged its lowest YoY level since then. Core Inflation decreased slightly to 3.86% in January, nonetheless logging its 10th consecutive monthly decline. The monthly US Consumer Price Index rose 0.3% in January, and monthly US Personal Spending inched up 0.2%. The Federal Reserve held its key Fed Funds Rate at 5.50% at its January 31st, 2024 meeting, marking the Fed’s fourth consecutive meeting in which rates were left unchanged.

Production and Sales

The US ISM Manufacturing PMI failed to break into expansion territory, falling by 1.3 points in February to 47.8. December US Retail and Food Services Sales contracted by 0.8% MoM, while the YoY US Producer Price Index increased by 0.9%.

Housing

MoM US New Single-Family Home Sales increased 1.5% in January, and MoM US Existing Home Sales increased by 3.1% to 4.00M in January. The Median Sales Price of Existing Homes fell 0.6% to $379,100 in January,  a seventh straight monthly decline putting it 7.6% below its all-time high set in June 2023. Mortgage rates increased slightly in February; the 15-year Mortgage Rate rose to 5.94% as of February 29th, and the 30-year ended the month at 6.94%.

Commodities

The price of Gold went largely unchanged in January to end the month at $2,048.10 per ounce. Crude oil prices continued higher in February; the price of WTI was 3% higher at $78.53 per barrel while Brent rose 1.2% to $84.01 both as of February 26th. Higher oil prices led the average price of gas to increase 13 cents per gallon in February, closing the month at $3.37 per gallon.

 

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Fixed Income

US Treasury Yield Curve

 

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Bond Fund Performance

January 2024 Market Update

US stocks posted modest gains to start the year. The Dow Jones Industrial Average rose 1.3%, the S&P 500 advanced 1.7%, and the NASDAQ added 1.0%. Large-caps fared better than Small-caps in January–the Russell 1000 index increased 1.4%, while the Russell 2000 dropped 3.9%. Growth outperformed value within both indices.

Five of eleven sectors had a positive start to 2024. Communication Services was January’s sector leader with a 4.4% gain, followed by Financials at 3.1%. The laggards this month were Materials, Consumer Discretionary, and Real Estate, the last of which posted a 4.8% decline.

The U.S. Economy added 353,000 jobs in January, nearly doubling expectations of 185,000. Unemployment and labor force participation remained unchanged at 3.7% and 62.5%, respectively. New home sales rebounded strongly in December, while mortgage rates stayed the same month-over-month. The 15-year Mortgage Rate was just below 6% as of February 1st.

Treasury yields had an uneventful start to the year as longer-term treasuries posted slight increases. The 30-year rose 19 basis points to 4.22%, the most of any duration. The 1-month, 6-month, and 1-year T-Bills all fell by single-digit basis points. The largely muted activity in treasury yield movement translated into little movement by short-term bond ETFs, though the iShares 20+ Year Treasury Bond ETF (TLT) fell 2.3%.

 

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Chappell Wealth Watch! Magnificent Seven vs. Magnificent Six

One of the top headlines from 2023 was the outperformance of the “Magnificent Seven” mega-cap stocks: Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA).

However, Tesla has been the underperformer of this group over the past twelve months. The electric vehicle manufacturer has risen 8.1% since last February, and plummeted 24.6% last month alone. This chart shows the divergence of the Magnificent Seven vs. the Magnificent Six, which excludes Tesla. The latter is 12.8 percentage points higher on a TTM basis.

 

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Equity Performance

Major Indexes

 

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Value vs. Growth Performance

 

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US Sector Movement

 

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Top 10 S&P 500 Performers

 

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10 Worst S&P 500 Performers

 

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Economic Data

Employment

January’s unemployment rate stayed unchanged at 3.7%, as did the labor force participation rate at 62.5%. The US unemployment rate has now come in at 3.7% for three consecutive months. 353,000 new jobs were added in January according to nonfarm payroll data, far surpassing the expected increase of 185,000.

Consumers and Inflation

The US inflation rate for December clocked in at 3.35%, marking a slight MoM increase. Inflation has hovered between 3-4% since May. Core Inflation slowed to 3.93% in December, the first time it has fallen below 4% since May 2021. The monthly US Consumer Price Index rose 0.3% in December, and monthly US Personal Spending increased 0.7%. The Federal Reserve held its key Fed Funds Rate at 5.50% at its January 31st, 2024 meeting, marking the Fed’s fourth consecutive meeting in which rates were left unchanged.

Production and Sales

The US ISM Manufacturing PMI jumped two points higher to 49.1 in January, bringing it within one point of crossing into expansion territory. December US Retail and Food Services Sales rose 0.55% MoM, while the YoY US Producer Price Index increased 0.98%.

Housing

MoM US New Single-Family Home Sales rebounded by 7.97% in December after two consecutive monthly declines. However, MoM US Existing Home Sales slipped 1.1%. The Median Sales Price of Existing Homes fell for the sixth straight month to $382,600 in December, a monthly decline of 1.3%, and is 6.7% below its all-time high set in June 2023. Mortgage rates had little movement to start the year; the 15-year Mortgage Rate was 5.94% as of February 1st, and the 30-year stood at 6.63%.

Commodities

The price of Gold declined 2.1% in January to $2,018.50 per ounce. Crude oil prices pushed higher in January; the price of WTI ended the month at $75.84 per barrel while Brent was $83.99, with respective monthly increases of 6.9% and 8.1%. The average price of gas fell 2 cents per gallon in January despite the higher oil prices, closing the month at $3.21/g.

 

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Fixed Income

US Treasury Yield Curve

 

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Bond Fund Performance