While AI and chip stocks continue to dominate the headlines, the S&P surprisingly was led by the “old economy” Industrials sector during the first half of the year. Combined with the strong performance of small cap and international stocks, we continue to be in the midst of a healthy, broad-based rally, and as such our Momentum Dial remains in a Positive position.

While the labor market has proven resilient this year, the June jobs report didn’t provide much to be optimistic about. Total nonfarm payrolls badly missed expectations, the two previous months of strong growth were revised downward by a total of 74,000 jobs, and the labor force participation rate declined as more of the working-age population stopped looking for jobs altogether. With the average consumer still feeling pinched over higher costs and losing confidence in the jobs market, our Fundamental Dial remains  Negative.

Jeremy Grantham, the GMO co-founder and long-time bear on US stocks, renewed his call this month and labeled this the “most expensive market in US history”, given that nearly every closely-watched valuation metric sits at or near all-time highs. Based on the data, our Valuation Dial continues to sit in a Negative position.