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Commentary
The stock market is benefiting from the Russell index realignment, which created June buying pressure in small-to-mid capitalization stocks. For the month of June, the Russell 2000 gained 3.6% vs. losses in the S&P 500 and NASDAQ, but last quarter delivered 21% gains in both the Russell 2000 and NASDAQ:
Second Quarter Gains
NASDAQ +21.4%
Russell 2000 +21.2%
S&P 500 +14.9%
Dow Industrials +13.1%
(Data source: Yahoo Finance)
Both the NASDAQ Composite and S&P 500 posted their best quarter in the past six years. Although NASDAQ posted an impressive 21.4% gain for the second quarter, that is below the average annual earnings among NASDAQ stocks, according to FactSet, so price-to-earnings (P/E) ratios are being compressed. Furthermore, I expect third-quarter GDP growth to accelerate to a 5% to 6% annual pace, fueled by AI productivity gains, surging energy exports and robust consumer spending. Order backlogs for AI and data center-related companies reached a 3-year delay, so the data center boom should continue….
The stock market is benefiting from the Russell index realignment, which created June buying pressure in small-to-mid capitalization stocks. For the month of June, the Russell 2000 gained 3.6% vs. losses in the S&P 500 and NASDAQ, but last quarter delivered 21% gains in both the Russell 2000 and NASDAQ:
Second Quarter Gains
NASDAQ +21.4%
Russell 2000 +21.2%
S&P 500 +14.9%
Dow Industrials +13.1%
(Data source: Yahoo Finance)
Both the NASDAQ Composite and S&P 500 posted their best quarter in the past six years. Although NASDAQ posted an impressive 21.4% gain for the second quarter, that is below the average annual earnings among NASDAQ stocks, according to FactSet, so price-to-earnings (P/E) ratios are being compressed. Furthermore, I expect third-quarter GDP growth to accelerate to a 5% to 6% annual pace, fueled by AI productivity gains, surging energy exports and robust consumer spending. Order backlogs for AI and data center-related companies reached a 3-year delay, so the data center boom should continue….
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