June 1st, 2022
Has the housing market peaked? Multiple data points indicate that the housing boom is giving way to a “Great Deceleration” period.
Stock market investors breathed a sigh of relief last week as the S&P 500, Dow, and Nasdaq all snapped their long losing streaks. So did tech stocks like Apple and Google lead the way? Nope, try Dollar General and Dollar Tree.
Keep reading our weekly news update to get the full scoop on each of these stories and more!
What Everyone’s Been Buzzing About
Pending home sales plummeted in April. The Pending Homes Sales Index (PHI) fell by 3.9% in April, which was more than double what analysts expected. Year-over-year, the index has dropped 9.1%.
- What it means: This is now the third sign from the past week that the housing market is indeed slowing down. That doesn’t mean that housing prices are doomed to crash as inventory is still very low by historical standards. However, supply is slowly rising so the expectation is that price growth will decelerate over the next one to two years. That’s ultimately a good thing for homebuyers who saw home prices far outpace wage growth in 2020 and 2021
The stock market finally had a winning week: After declining for seven straight weeks and dangerously flirting with a bear market, the SP 500 finally moved higher. It finished last week up 6.09%. The Dow (+5.79%) and Nasdaq (6.45%) both broke their multi-week losing streaks as well.
- Are we set for another bull run? It’s too early to say. The stock market does have a history of rising quickly after it nears correction territory. But record inflation, rising interest rates, and recession talks are all ongoing economic concerns that could hold the market back for the foreseeable future.
Is Zoom primed for a rebound? Zoom (ZM) was a favorite pandemic stock that’s been on a steady decline since the end of 2020. But while many shoppers have been itching to return to their old habits, many employees (and employers) have found that the work-from-home arrangements suits them just fine. And Zoom is still a massively popular video conferencing tool for remote workers.
- The point? Zoom has fallen so far that it may actually be undervalued at this point. During last Monday’s earning call, the company beat its earnings expectations by 17.91%. The stock spiked on the news, but it still has plenty of room for growth after dropping more than 70% from its pandemic peak.
Dividend stocks are having a moment. After a few years of not being able to keep up with the astronomical appreciation of high-growth stocks, dividend stocks are demonstrating their best superpower: stability. As of writing, the S&P 500 Dividend Aristocrats Index is down just 6.55% in total returns in 2022 compared to the S&P 500 Index which is down over 14%. And over the past full year, the Dividend Aristocrats are actually up 1.86% while the S&P 500 is down 1.91%.
- Should I go all in on dividend stocks? Not necessarily. Over the past 10 years, the S&P 500 and Dividend Aristocrats Index have provided nearly identical returns. But if you want a less bumpy ride along the way, placing a heavier emphasis on dividend-paying stocks could be the right move for you.
Dollar stores are back! High inflation is typically a good thing for stores like Dollar Tree and Dollar General as consumers look for ways to cut costs on common household items. Last week, both stores boosted their 2022 outlooks and their stocks shot up on the news.
- Why it matters: As wallets are squeezed, households become more actively engaged in finding ways to save. So if you’re a momentum investor, you may want to consider including more value brands (and fewer luxury brands) in your portfolio this year.
What To Keep Your Eye on This Week
Vehicle sales report for May. Due to the ongoing chip shortage, vehicle sales have been in a massive slump over the past year. The last SAAR of new-vehicle sales was somewhat encouraging as it showed a 6% month-over-month increase. Still, sales numbers were more than 20% lower than April 2021. Analysts are hoping that when the latest sales report is released today it will show that the automotive industry continued to gain ground in May.
June’s unemployment rate. The unemployment rate for June will be released by the Bureau of Labor & Statistics on Friday. For the past two months, the unemployment level has been at a post-pandemic low of 3.6%. A drop of one more tenth of a percentage point down to 3.5% would represent a full pandemic recovery of the U.S. job market.
Here are three featured stories from around the web that our team found interesting:
- Is It Time to Rethink What ESG Investing Means? (Fast Company)
- The Dune Crypto Collective is Facing a Reckoning (The Verge)
- Justin Timberlake Sells His Song Catalog for $100M (New York Post)
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