Weekly Wrap
During the week of June 24-28, 2024, the U.S. stock market experienced mixed performance amidst fluctuating economic indicators with week highs eventually giving some back to yield-related losses. Favorable inflation revisions initially boosted investor sentiment, but stocks and bond yields reversed course. Overall, the first half of the year closed out strong - up 4% on the quarter and about 14% YTD - and historically this suggests continued strength into the back half of the year.
Inflation showed signs of cooling, which led to revised expectations for future interest rate hikes. Consumer sentiment improved slightly, reflecting optimism in economic recovery. Technology stocks, especially those in the AI sector, continued their upward trajectory, benefiting from strong earnings reports and positive outlooks. The energy sector saw gains due to rising oil prices driven by supply constraints and geopolitical tensions. Healthcare stocks were mixed, with some companies benefiting from new drug approvals while others faced regulatory challenges. Banks and financial institutions experienced volatility, influenced by fluctuating interest rates and mixed earnings reports. The value of Japan’s currency relative to the U.S. dollar fell on Friday to its lowest level since 1986.
Federal Reserve commentary hinted at a cautious approach to future rate hikes, balancing the need to control inflation without stifling economic growth. Escalating geopolitical tensions in Eastern Europe contributed to market volatility, particularly affecting energy and defense stocks.
Overall, the market demonstrated resilience amidst mixed economic signals, with investors navigating inflation concerns, interest rate speculations, and geopolitical uncertainties. Defensive sectors like utilities and gold continue to provide safe-havens for those more risk-averse right now.
The week ended with indices giving a bunch back on Friday and stocks closed mixed on the week but with breadth showing some signs of improving and possibly solidifying first half gains. Independence Day is coming up so we’ll have another shortened trading week with what I expect to be lower-than-average volume. Keep it light and tight this week and in the absence of something exogenous, don’t read too much into movement.
