The June Issue of the ETF Investor Guide is AVAILABLE NOW! Links to the June Data Files have been posted below. Market Perspective: Index Gains Driven by Only a Few […]
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The Investor Guide to Vanguard Funds for June 2024
The Investor Guide to Vanguard Funds for June is AVAILABLE NOW! Links to the June data files are posted below. Market Perspective: Tech Stocks Continue to Drive Markets The Nasdaq […]
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Market Perspective for June 16, 2024
This week was a key one for traders as there were three significant news items released. These items will likely have an impact on monetary policy and equity markets over the next several weeks or months.
The first major piece of news came out on Wednesday morning when the inflation data for May was released. It indicated that the inflation rate was 3.3 percent on an annualized basis and was flat for the previous month. Core CPI rose .2 percent compared to an estimated .3 percent. Analysts had expected an annual CPI figure of 3.4 percent and a monthly figure of .1 percent before the reports were made public.
Also on Wednesday, the FOMC decided to keep interest rates steady at a range of 5.25 percent to 5.5 percent. Jerome Powell said that recent data had been encouraging but was not enough to change anyone’s mind about cutting rates just yet. It was also revealed that the Fed expects to cut rates just once in 2024 with the possibility of more cuts coming in 2025 and beyond.
The final major piece of news came out on Thursday when the Price Producer Index (PPI) came out. It revealed that prices had gone down by .2 percent on a monthly basis while Core PPI for the same period was flat. It was expected that the traditional PPI would increase by .1 while Core PPI would go up by .3 percent.
On Thursday, unemployment claims data was made public and found that 242,000 people had filed for benefits over the past seven days. That was compared to 229,000 last week and a projected 225,000 before the report came out.
On Friday, the University of Michigan released its preliminary consumer confidence and inflation expectation reports. In May, consumer confidence plunged to 65.6 compared to an expected 72.1. Last month, the report came in at 69.1. Consumers expect that inflation will be at 3.3 percent a year from now, which was roughly in line with last month’s data.
The Dow finished the week down 121.65 points to close at 38,589. The market made its high of the week on Wednesday morning when it hit 39,078 and made its low of the week on Friday morning when it hit 38,363 before rebounding in the afternoon to close out the final trading session.
The S&P 500 finished the week up 92 points to close at 5,431. The market would make its high of the week on Wednesday morning when it reached 5,442 and would make its low of the week on Tuesday when it dipped to 5,327.
The Nasdaq was up more than 3.4 percent this week to finish at 17,688. This was a gain of 591 points for a market that is up almost 30 percent over the past 12 months and is up 19.5 percent in 2024. The market would make its high of the week of 17,735 on Thursday morning and made its low of the week 17,069 on Monday morning.
In international news, the Bank of Japan (BOJ) opted on Thursday to keep interest rates at .10 percent. However, the BOJ said that it may begin to reduce its bond balance sheet to let the market decide what appropriate yields should be. On Wednesday evening, Australia announced that its unemployment rate was 4 percent for the month of May and that the economy had added 37,400 jobs during that time.
The upcoming week will be an interesting one as U.S. markets will observe the Juneteenth holiday on Wednesday. However, there will be several key news releases including the Empire State Manufacturing Index on Monday, retail sales data on Tuesday and Flash PMI Manufacturing and Flash PMI Services reports due out on Friday. Switzerland will make a rate decision on Tuesday morning while Australia will do the same on Monday night.
The Investor Guide to Fidelity Funds for June 2024
The Investor Guide to Fidelity Funds for June 2024 is AVAILABLE NOW! June Data Files Are Posted Below Market Perspective: Stocks Rally on Low Volume Equities rebounded from an April correction […]
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Market Perspective for June 9, 2024
On Monday, the Final Manufacturing PMI and ISM Manufacturing PMI data was made public. The manufacturing PMI from S&P Global came in at 51.3 percent, which indicates that the sector grew over the past month. The ISM PMI came in at 48.7 percent, which indicates that there was a contraction in the industry. It’s likely that the truth is somewhere in the middle with manufacturing largely remaining flat during the month of May.
On Tuesday, the Job Openings and Labor Turnover Survey (JOLTS) report came out. During May, there were 8.07 million job openings in the United States, which was the lowest in years. This was seen as an indication that the labor market may be slowing down.
On Wednesday, the ADP version of the nonfarm payroll (NFP) report came out and revealed 152,000 jobs were added to the economy in May. This was lower than the projected 173,000 and also lower than the 188,000 figure that was reported for April.
In addition, the ISM Services PMI was released, and it came in at 53.8 percent, which was higher than the 51 percent projection and the 49.4 percent reported last month. This indicates that service sector spending may still be a key driver of the economy.
On Thursday, unemployment claims data came in, and it was revealed that 229,000 people had filed for benefits over the past seven days. This was compared to a projected 220,000 and 221,000 that was reported the prior week.
On Friday, the Bureau of Labor Statistics (BLS) came out with its version of the NFP report, and it was quite a shocker to many market observers. In May, there were 272,000 jobs created compared to an estimated 182,000 and 165,000 a month ago. Meanwhile, the unemployment rate ticked up to 4 percent and average hourly earnings went up .4 percent over the past month.
The increase in the unemployment rate is likely because of an increase to the overall labor participation rate. However, the increase in wages and job gains is likely related to continued strength in the economy, which could call into question whether the Fed is ready to cut rates. There was growing belief that the May jobs report would indicate further weakness in the economy and pave the way for reduced rates.
Over the past week, the S&P 500 gained 53.16 points to close at 5,346. The market made its weekly high on Friday at 5,368 and made its low of the week on Monday at 5,242. Currently, the S&P is at both yearly and all-time highs and has earned a return of 25 percent over the past 12 months.
The Dow was relatively flat this week finishing up 91 points to close at 38,798. This was a .24 percent gain over the last five trading days. The market would make its low of the week on Monday morning when it dipped to 38,291 while making a high of 39,004 on Friday.
The Nasdaq closed the week at 19,000 after gaining more than 346 points this week. That represented a gain of 1.86 percent over the past five trading days. As with the other markets, the Nasdaq made its low of the week on Monday at 18,394 and made its high of the week on Friday at 19,090.
In international news, the Bank of Canada (BOC) and the European Central Bank (ECB) cut their respective interest rates by 25 basis points. On Tuesday, Switzerland announced that its inflation rate was .3 percent on a monthly basis. Also on Tuesday, Australia announced that its gross domestic product (GDP) for the past quarter grew by .1 percent compared to an expected .2 percent.
The upcoming week is going to be full of news from both domestic and foreign sources. On Wednesday, inflation data is set to be released and the FOMC will make its June rate decision. It’s expected that rates will remain unchanged at 5.5 percent. Price change data will be released on Thursday. Internationally, Great Britain will release GDP data on Wednesday, while Japan will make its policy rate statement on Thursday evening.