Month: June 2024

Bonds haven't been acting like bonds for years. Blame the Federal Reserve for pushing rates up to a 23-year high to combat inflation.  Have bonds provided ballast for portfolios?  Nope. Have they protected and preserved capital? Nope. Have they cost investors money?  You bet.  So, what's an investor to do now? Lean into bonds.  Say, what?  Yes, all the grim news in Bondland sets the stage for better performance ahead. Investing is about the future, not yesterday's news.  But no asset class stays down forever. And when you consider the high starting point of yields (many bond yields are at their highest levels in more than 15 years) — and odds that the Fed's next move will be to cut rates not hike them further — the outlook for fixed-income brightens.  

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A rally that has propelled U.S. equities to record highs increasingly rests on red-hot chipmaker Nvidia and a handful of other giant stocks, reviving concerns that the market’s performance has become tied to a cluster of companies. A look at the ten largest stocks in the S&P 500 shows their weighting ballooned to 34.1% at the end of May, the highest-ever month-end weight for the index’s top ten.  Many investors believe the companies’ market heft is deserved, given their robust earnings, dominant competitive positions and expectation they will capitalize on advances in the burgeoning artificial-intelligence field. But some are concerned the concentration of gains in a handful of powerhouses could threaten indexes if some of the big names start to wobble.

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