The market’s narrow focus persisted in the second quarter, with tech giant Nvidia’s remarkable surge propelling it to briefly surpass Microsoft as the world’s largest company. The quarter also saw a shift in investor sentiment, driven by encouraging inflation data and hopes of a potential monetary easing cycle by the Federal Reserve. While economic data was mixed, with robust job growth offset by slower consumer spending, corporate profits held up well against interest-rate headwinds. In fact, 80% of S&P 500 companies topped consensus estimates, with first-quarter earnings growing 6.0% year-over-year.
Against this backdrop, the S&P 500 Index advanced 4.3% in the second quarter, bringing its year-to-date gain to 15.3%. The Lazard US Equity Concentrated Portfolio underperformed its benchmark during the quarter, but remains focused on investing in companies that can sustain elevated levels of financial productivity.
Several portfolio holdings made notable moves during the quarter. Broadcom, a leader in AI optimization, saw its shares rise after reporting better-than-expected earnings and raising guidance. Alphabet, the parent company of Google, also saw its stock price climb after reporting solid quarterly results, including strong expense management and margin expansion. Oracle’s shares rose after the software and services provider reported strong quarterly bookings and guided to accelerating growth.
On the other hand, shares of Live Nation fell on news that the Department of Justice’s antitrust lawsuit against the live entertainment company could begin sooner than expected. The portfolio exited its position in Labcorp after the healthcare diagnostics company announced a surprising acquisition. Corpay’s shares fell despite reporting quarterly earnings in line with consensus estimates, due to weaker-than-expected results in its North American vehicle and lodging businesses.
Looking ahead, the portfolio remains cautious about the potential for unsustainable valuations in certain stocks, particularly those related to artificial intelligence. However, it believes that a broadening out of index participation will present a better environment for its style of investing and should deliver outperformance over time.
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