Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Wealth Management Group of Wells Fargo Advisors. We hope you all are staying cool & hydrated during the recent heat waves. We appreciate you tuning in for June’s edition of “The Market Recap.” Phil Anderson, Associate Vice President - Investments is currently enjoying time with his family in Alaska so I will be recapping June.
1. The largest increases in y/y earnings at the sector level came from Communication Services (+34%) and Utilities (+31.5%) sectors. The largest decline came from the Energy sector, where the Refining and Marketing (-61%) and Integrated Oil & Gas (-27%) subsectors saw significant declines in EPS, according to FactSet.
2. The current forward P/E for the S&P 500 is 20.7x (as of 6/7/24), compared with a 10 year average of 17.8x earnings. According to FactSet, the “Bottom Up” 12-month target price for the S&P 500 (which uses analyst’s estimates on the 500 companies, rather than a projection for the index as a whole) is 5,900, which represents 10.2% upside from the close on June 6th.
3. At the end of the Global Financial Crisis in 2009, U.S. homeowner’s equity totaled $9.3 trillion according to the Fed Board of Governors. That figure increased steadily through 2020, when first low interest rates and now a lack of inventory propelled home values higher. Today, U.S. homeowner’s equity totals to $32.7 trillion. It is estimated that borrowing against homeowner’s equity totals $400 billion, or 1.2% of total equity in the U.S.A.
In Summary:
1. Communications Services and Utilities have seen the largest y/y EPS growth in 1Q24, with the Energy sector showing the biggest contraction.
2. The S&P 500 trades for 20.7x expected EPS, vs. a 10 yr. average of 17.8x. Bottom-up analysts estimates place a 12-month target on the S&P 500 of 10.2%.
3. U.S. Homeowner’s equity has ballooned from $9.3 to $32.7 trillion over the past 15 years. It is estimated that homeowner’s have only borrowed about 1.2% of that through home loans.
Now let’s see what James & Ryan Richards, Associate Vice President – Investment Officer have to say
JAMES: Although it’s been pretty hot recently, July 3rd brings the start of hot and sultry “Dog Days of Summer” so it doesn’t seem to be cooling down anytime soon.
RYAN: Yes James, make sure you are stocked up on your sunscreen and stay hydrated out there.
JAMES: Ryan there seems to be a few birthdays happening recently. My wife celebrated her birthday in late June as well as Phil Anderson. Then my oldest daughter will be one year older on July 4th. Speaking of birthday’s Ryan I hear there are few happening in your family?
RYAN: That’s right James. Palmer turned one and had a great time at her birthday party with the smash cake. Then Charleigh’s is next and Gage’s is shortly after. All three are within 2 weeks. Then my birthday is right after.
JAMES: Well I bet that saves you some money on party planning.
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