The Week in Review: 6/17/2024
“Do the thing you fear most, and the death of fear is certain.” ~ Mark Twain
Good Morning,
The S&P 500 and Nasdaq Composite hit fresh record highs last week and closed 1.6% and 3.2% higher, respectively. Other major indices logged declines on the week, though.
The Dow Jones Industrial Average declined 0.5% and the Russell 2000 fell 1.0%.
Gains in the mega cap space helped play an integral role in index-level gains for the S&P 500 and Nasdaq. As has been the case most of 2024.
- Apple was an influential winner from the space, jumping 7.9% and hitting record highs after introducing "Apple Intelligence," the personal intelligence system for iPhone, iPad, and Mac, at its Worldwide Developers Conference.
- Broadcom, another top performing mega cap, surged 23.4% after a better-than-expected earnings report, outlook, and a 10-for-1 stock split announcement.
- Another notable technology company -- Adobe -- delivered pleasing earnings results and guidance, gaining 12.9% this week.
The equal-weighted S&P 500 slid 0.5% last week.
These three names helped propel the S&P 500 information technology sector to a 6.4% gain.
The next best performing sector was real estate, gaining 1.2%. On the flip side, the energy (-2.3%) and financial (-2.0%) sectors logged the biggest declines.
The underlying downside bias that left the equal-weighted S&P 500 lower on the week was driven by some normal consolidation efforts following a solid run in many stocks.
Meanwhile, mega caps were reacting to the corporate news, along with a solid drop in market rates.
The 10-yr note yield declined 22 basis points this week and the 2-yr note yield declined 20 basis points to 4.69%.
This was in response to this week's slate of bond auctions, including a soft $58 billion 3-yr note sale, a strong $39 billion 10-yr note sale, and a solid $22 billion 30-yr bond reopening.
The activity in Treasuries was also in response to pleasing inflation data…
The May Consumer Price Index reflected some welcome disinflation on a year-over-year basis in total CPI (actual +3.3%; prior +3.4%) and core CPI (actual +3.4%; prior +3.6%) and the May Producer Price Index showed a 0.2% month-over-month decline in total PPI while core PPI was unchanged from the prior month.
The market was also reacting to the latest move by the Fed…
The FOMC left the target range for the fed funds rate unchanged at 5.25-5.50%, as expected. The vote was unanimous, as expected.
The directive reiterated that, "The Committee does not expect it will be appropriate to reduce the target range until it has greater confidence that inflation is moving sustainably toward 2 percent," as expected.
If there was a surprise, it would be the Summary of Economic Projections (SEP), which showed a median estimate of only one rate cut this year versus three at the time of the March projections.
Also, Fed Chair Powell's press conference featured a Fed Chair who was non-committal about the policy path.
Rate cut expectations moved up because of all these events…
The fed funds futures market is pricing in a 70.2% probability of a 25 basis points rate cut at the September FOMC meeting, up from 50.5% one week ago, according to the CME FedWatch Tool.
Market Snapshot…
- Oil Prices – Oil prices finished out the week nearly 4% higher on expectations that summer fuel demand will draw down inventories. West Texas Intermediate crude was down 17 cents, or 0.22% to $78.45 a barrel, while Brent crude futures was down 13 cents, or 16% to $82.62 a barrel.
- Gold– Gold prices rose and were on track for their first weekly gain in four after economic data signaled a softening of price pressures. Spot gold was up 1.4% at $2,334.70 per ounce. U.S. gold futures settled 1.34% to $2,349. Silver Finished the week at $29.472.
- S. Dollar– The dollar was up 0.17% at 105.23. The dollar index rose 0.26% to 105.517. Euro/US$ exchange rate is now 1.073
- S. Treasury Rates– U.S. Treasury yields slipped again as economic data pointed to easing inflation. The U.S. 10-year Treasury yield was trading around 4.209%, down about 3 basis points.
- Asian shares were down in overnight trading.
- European markets are mixed.
- Domestic markets are off slightly this morning.
This week will have a plethora of economic releases, including Retails Sales, Industrial Production, and Manufacturing Production on Tuesday.
Our markets will be closed Wednesday in honor of Juneteenth.
Have a wonderful week!
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