Stock market rotation, jobless claims, loud budgeting: Wealth!
On today's episode of Wealth!, Host Madison Mills breaks down some of the key stories impacting your personal finance goals, from the stock market rotation to the loud budgeting trend. The stock market averages (^DJI, ^IXIC, ^GSPC) are attempting to gain back some ground after disappointing second-quarter reports from the Magnificent Seven tech giants triggered a widespread sell-off earlier this week. NFJ Investment Group managing director and senior portfolio manager Burns McKinney suggests this dip could mark "the start of a longer and more enduring rotation" in markets, driven by two key factors. First, three consecutive inflation reports came in below expectations, sparking hopes for a Federal Reserve rate cut. Second, earnings expectations for AI tech names have become so lofty that they're increasingly difficult to meet. When it comes to value plays, McKinney advises investors to look for companies generating substantial free cash flow. He also recommends focusing on businesses that are raising and paying dividends, as this signals "the management's confidence in the business." US initial jobless claims fell to 235,000 last week, down 10,000 from the previous week. Indeed Hiring Lab research director Nick Bunker explains, "It's a labor market that's rebalanced, it's moderated, and it's in a good spot right now. But any further increase in unemployment or reduction in job openings that starts to, if not necessarily trip alarm bells, should start to make folks a little uncomfortable about how much this sweet spot we're in right now could last." Chipotle (CMG) reported second-quarter earnings, which beat expectations on both the top and bottom lines. BTIG Managing Director and restaurant analyst Peter Saleh believes Chipotle's growth will come from opening new stores and attracting more customers. He sees Chipotle as "a best-in-class operator" with "a lot of growth ahead of them." However, Higher minimum wage in California put pressure on Chipotle (CMG) as consumers pushed back on higher menu prices. Yahoo Finance Senior Reporter Brooke DiPalma breaks down how the California FAST Act impacted the burrito chain's pricing and how it could win back consumers struggling with the effects of inflation. Ford (F) posted its second quarter results, which showed an adjusted earnings of $0.47 per share versus an expected $0.67. Autoblog Editor-in-Chief Greg Migliore explains, "Right now, EVs are in a tough spot because it's very competitive. The margins can be pretty thin on them. And, the technology is something that companies have to invest in to bring it to market. So for many companies, this is their first or second generation of electric vehicles, and they essentially need to pay off that technology. So right now, you're not going to fully realize that in the sticker prices of most vehicles, the federal tax incentive of $7,500, which is available for consumers, is meant to sort of ease that." While money has been a subject often seen as taboo, Shaping Wealth CEO Brian Portnoy touts loud budgeting as "an exercise in bravery," especially as finances are the number one source of stress for Americans. For those interested in starting loud budgeting, Portnoy encourages them to be "very crystal clear" in terms of their goals. He explains, "What we don't want to do is go online, whether it's TikTok or Twitter or some other platform, and just start blasting out all of our financial details. That's not particularly healthy. What we might be wanting to do in the context of loud budgeting is saying, 'Hey, I want to keep my spending under wraps. I want to have a disciplined plan, and here's how I'm going to do it.'" Similarly, when it comes to retirement planning, Yahoo Finance Senior Columnist Kerry Hannon believes that self-awareness is critical. She encourages those looking to retire to have conversations with a therapist, retirement coach, or even friends and family to assess where they are in life and what their financial goals are. For more expert insight and the latest market action, click here. This post was written by Melanie Riehl
