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The month that was:
In the past month, the S&P 500 went up by 6.5%, the Nasdaq went up by 6.6%, and the Dow went up by 4.6%. Unlike May, when only tech stocks went up, this time almost every part of the market went up. All 11 sectors of the S&P 500 had a positive month. For the first half of 2023, the Nasdaq went up by almost 32%, which is its best first half since 1983! The S&P 500 went up by about 16%.
There were two big reasons for the rally. First, the debt ceiling deal passed at the start of June, so the market no longer had to worry about the government not being able to pay its bills. Second, on June 14th, the Fed paused and did not raise interest rates for the first time in more than a year. However, the Fed also said that it might raise interest rates two more times this year, because inflation is still too high.
On June 8th, the S&P 500 officially entered a new bull market. A bull market is when the market goes up by 20% or more from its lowest point. A bear market is the opposite, when the market goes down by 20% or more from its highest point. The names come from how the animals attack. A bull thrusts its horns up into the air, while a bear swipes its paws down. The S&P 500 hit its lowest point on October 12th, 2022, and by June 8th it had gone up by 20% from there. This ended the longest bear market for the S&P 500 since 1948.
A little over a year ago, I wrote that a rally in the market was likely just a bear market rally and that the market would go down again, which is what happened. That is why it is important to wait until the market actually goes up by 20% before calling it a bull market. Even in a bull market, the market will still have down months, so I will keep buying high quality companies when they go on sale.
Buys -
Bought 22 NDAQ at $51.28
Bought 3 NDAQ at $49.67
Nasdaq Inc is the company that runs the Nasdaq stock exchange. It also sells software and data to banks and investors. On June 12th, Nasdaq announced that it would buy a software company called Adenza for $10.5 billion, which is the biggest purchase in its history. Investors thought Nasdaq was paying too much, and the stock went down more than 10% in one day, to its lowest price in almost a year. It is funny that on the same day the Nasdaq index went up, the company that runs it went down! Software sales are steadier than trading fees, so I think this deal can make Nasdaq's business more stable in the long term. I used the drop to start a new position.
Bought 7 TGT at $128.80
Bought 1 TGT at $134.49
Target's stock went down about 15% in a week after a controversy over its Pride Month merchandise caused some customers to stop shopping there. Target is also being hurt because people are spending less money on things they don't need, like home decor and electronics. However, Target is a very well managed company and is also a Dividend King that has raised its dividend for more than 50 years in a row. I used the opportunity of the low price to start a new position.
Bought 3 DG at $163.95
Dollar General is a discount store with thousands of locations, mostly in small towns. On June 1st, DG had worse results than expected and lowered its forecast for the year, and the stock went down almost 20% in one day. Many of DG's customers have lower incomes, and they are being hit hard by inflation. I think the stock went down too much, so I started a new position.
Bought 1 FDS at $395.33
FactSet provides financial data and analysis software to investment professionals. On June 22nd, FactSet reported results that were better than expected, but it said its revenue for the year would be at the lower end of its forecast, and the stock went down about 4.5%. FactSet is a very consistent company that has raised its dividend for more than 20 years in a row. I used the dip to start a new position.
Sells -
Sold 10 DIS at $93.82
Disney had a bad May, and it was one of the reasons the Dow went down. Disney stopped paying its dividend in 2020, and its streaming business, Disney+, is still losing money. Since I prefer companies with growing dividends, I sold my shares and used the money for this month's buys.
Sold 3 LHX at $188.97
Sold 5 SCL at $92.77
I bought these shares last month, and they went up a little bit. I sold them for a small profit to raise cash for this month's buys, which I thought were better bargains.
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