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The month that was:
In the past month, the Nasdaq went up by about 4%, the Dow went up by about 3.4%, and the S&P 500 went up by about 3.1%. This was the fifth month in a row that the S&P 500 and the Nasdaq went up, which is their longest winning streak since 2021. The Dow also went up 13 days in a row, which was only one day short of its record from 1987.
There was more good news on inflation. The CPI for June came in at 3%, which is the lowest it has been in two years. Last summer, inflation was above 9%. Even so, on July 26th, the Fed raised interest rates by another quarter point, to between 5.25% and 5.5%. This is the highest interest rate in 22 years. Companies also had a good earnings season, as about 79% of S&P 500 companies beat their earnings estimates.
Many investors are now hoping for a soft landing. When the Fed raises interest rates, it is trying to slow down the economy so that prices stop rising so fast. The danger is that if the Fed slows the economy down too much, it can cause a recession, where companies lose money and people lose their jobs. A soft landing is when the Fed slows the economy down just enough to bring inflation down, without causing a recession. It is like a pilot landing a plane. If the pilot comes down too fast, the plane crashes, but if the pilot is careful, the plane lands gently on the runway. So far, inflation has come down a lot while unemployment has stayed low, so it looks like the Fed might be able to land the plane gently. However, the plane hasn't landed yet, so I am still careful to own high quality companies.
Buys -
Bought 1 FDS at $391.37
I added another share to my position in FactSet, which I started last month. The price was even lower than when I first bought it.
Bought 2 TGT at $135.06
I added a few more shares of Target. Target has been recovering slowly, and it is still at a good price for a Dividend King.
Bought 10 SWK at $99.49
I first bought SWK in April of last year at around $140. Since then, the price has gone down a lot because people are buying fewer tools for home projects. However, SWK has been cutting its costs and reducing its extra inventory, and it plans to save $1 billion by the end of this year. SWK also has a dividend that has been growing for more than 50 years! At under $100, I think SWK is a great buy for the long term.
Sells -
Sold 3 TGT at $131.00
I sold a few shares of Target for a small profit early in the month and bought back two shares later in the month.
Sold 5 NDAQ at $50.50
Sold 20 NDAQ at $50.38
Last month, I bought Nasdaq after its stock went down because of its plan to buy Adenza. After thinking about it more, I became worried about how much money Nasdaq is borrowing to pay for the deal. Nasdaq plans to borrow about $5.9 billion, and because of that, S&P lowered Nasdaq's credit rating. I sold all of my shares for a small loss. It is okay to change your mind about a stock when you learn new information. It is better to take a small loss than to hold on to a stock you are no longer confident in.
Thanks for reading my newsletter!