The S&P 500 smashed through 5500 for the 1st time last week. The indexes 34th new high of 2024!! Wow!
The major contributors have been the technology & communication sectors. In addition, stocks with innovation have also pushed the index higher, think weight loss.
How much higher can the S&P 500 rise without a credible pause or pullback?
Last week, practically all major stock indexes rose, except small caps. For the week the Dow rose .65%, the S&P 500 1.85% and the Nasdaq 3.42%. Small Caps pulled back (1.24%).
Foreign stocks followed, rising 2.11% and emerging markets up 2.29%.
Bond yields dropped, as the 10-Year US Treasury finished the week yielding 4.277%.
Economy Slowing?
Last week’s economic data reported, the US created 206,000 new jobs in June. 70,000 of the number were government jobs, leaving private sector job creation at 136,000. The prior 2 months were reduced by 110,000 job gains. The unemployment rate rose to 4.1%, the highest since 2021.
In addition, last week, the US ISM Manufacturing (PMI) was reported at 48.50. Below 50, signals contraction. The US ISM Services report also signaled contraction, 48.8. It’s premature to conclude the economy is slowing however it’s worth paying attention.
2nd Half 2024
What can we expect from now until year-end?
- We have 4 Federal Reserve Rate Meetings, 2 prior and 2 after the election.
- We’ll hear 6 sets of inflation reports (CPI, PPI, PCE).
- 5 monthly reports on job creation.
- 2nd Quarter and 3rd Quarter Corporate Profit Reports will be known.
- Too many more to list.
- Oh yes, we have a Presidential Election.
This is all normal!
The economy and stock markets have exceeded practically everyone’s honest expectations. That brings me back to a college economics 101 course. The professor said, don’t ever doubt the resiliency of the US consumer to spend. The consumer will spend until they can no longer do so, and will then start again, when able to do so. I give the Professor an “A” for his wisdom.
Will the Federal Reserve cut interest rates between now and year-end? If the current short-term trend continues, meaning inflation data continues to abate, I’m thinking yes. Readings from the CPI, PPI, etc., will need to continue to be reported on the soft side.
The Fed’s work may become even more challenging after rates are reduced. The Fed will be on the watch for any reversal, meaning costs rising again. On the other end, the Fed will have to monitor the impact of a slowing economy and to not steer us into a recession. I’ve always said, the job of the Federal Reserve Chairperson is one of the most important jobs in the world. The Fed influences the cost of capital, everywhere!!
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