Market Report Jun 18 2023

The recently released Consumer Price Index (CPI) data suggests that inflation rate has fallen to a two-year low of 4%, with core inflation rates dipping to 5.3%, a figure that may still be considered high by the Federal Reserve (Fed). As Jerome Powell is set to deliver testimonies in front of the House Banking Panel on Wednesday, the market will be closely monitoring the Fed's stance. Predictions anticipate two more rate hikes; while the first one appears to be factored into market expectations, there's only a 15% probability of the second hike happening this year. The current data might suggest at least one rate hike this year, possibly followed by another early next year.

On the equity front, the S&P 500 and NASDAQ have shown significant bullish trends. The S&P 500 has had the best number of consecutive bullish days since November 2021, indicating robust market sentiment. The NASDAQ, on the other hand, has marked an even better performance with eight consecutive weeks of growth, its longest winning streak since March 2019. In the pre-market, Virgin Galactic stock surged by 47%, eventually closing the day with a 16% increase. AMD has recently introduced a new chip optimized for AI, marking their effort to compete with Nvidia, both of which have contributed positively to our portfolio in recent weeks.

Tesla, one of our high performers over the last few years, has shown strong recovery even after market volatility, with a year-to-date return of 111%. To continue this growth, Tesla will need to focus on key areas such as reducing production costs and expanding its supercharging network. They must also diversify their vehicle portfolio by producing cheaper and more compact cars. Tesla's growth is reinforced by the absence of significant competition in its field. Looking ahead, both Tesla and Nvidia, given their involvement in AI, promise to be worthwhile assets to monitor over the year.

Anne Chapman

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