Weekly Market Insights

Stocks notched a solid gain last week, driven by the Fed’s decision, May’s inflation report, and Apple’s AI-related news.

The Standard & Poor’s 500 Index rose 1.58 percent, while the Nasdaq Composite picked up 3.24 percent. The Dow Jones Industrial Average, which has lagged most of the year, slid 0.54 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, fell 1.44 percent for the week through Thursday’s close.¹

S&P 500, Nasdaq Lead; Dow Lags

Market leadership took a familiar form. The tech-heavy Nasdaq led while the Dow trailed for the second week (and four out of the past six weeks).²

Stocks trended higher at the start of the week as investors cheered an artificial intelligence update from Apple.^3,4

By midweek, the market had split, with the Nasdaq and S&P 500 moving higher while the Dow lagged. Investors were upbeat after learning that consumer prices rose less than expected in May and that the Fed decided to keep rates steady. However, some investors were unsettled after learning Fed officials had shifted their outlook and now only penciled in a single rate cut between now and year-end. A few months ago, the Fed had indicated as many as three cuts were possible.⁵

Busy Week for News

Last week was chock full of market-moving events. Between Apple’s AI update, inflation, and the Fed, it was a toss-up which one influenced sentiment the most.

AI’s outsized role in driving market momentum continued last week. OpenAI’s deal with Apple arrived at the start of last week, and the news followed OpenAI’s deal earlier this year with Microsoft. (These companies are mentioned for illustrative purposes only; it is not a recommendation to buy, sell, or hold this or any security.)⁶

Wednesday morning, the Consumer Price Index (CPI) was announced. A few hours later, the Federal Open Market Committee updated its monetary policy. Those pieces of news have only arrived together 13 times since 2008.

The FOMC kept rates steady at the current 5.25-5.50 percent target range, a widely expected decision. However, the tame CPI report caused some volatility as investors grappled with how the report may influence Fed policy.^7,8

Footnotes and Sources

1. ^{The Wall Street Journal, June 14, 2024}
2. ^{The Wall Street Journal, June 14, 2024}
3. ^{The Wall Street Journal, June 10, 2024}
4. ^{CNBC.com, June 12, 2024}
5. ^{The Wall Street Journal, June 10, 2024}
6. ^{The Wall Street Journal, June 10, 2024}
7. ^{The Wall Street Journal, June 10, 2024}
8. ^{MarketWatch.com, June 10, 2024}

Stocks rose last week despite conflicting stories from economic reports.

The Dow Jones Industrial Average inched up 0.29 percent while the Standard & Poor’s 500 Index powered ahead 1.31 percent. The Nasdaq Composite led, picking up 2.38 percent. The MSCI EAFE Index tracks developed overseas stock markets and rose 1.29 percent for the week through Thursday’s close.¹

All Eyes on the Jobs Report

Weak manufacturing data prompted declines early in the week, reflecting investor concerns over the economy’s strength. But stocks rallied in anticipation of the jobs report on Friday.

However, the market reaction was mixed when the stronger-than-expected jobs report finally came. The S&P 500 touched a record high intraday before profit-taking late in the session.^2,3

The Catalyst That Wasn’t

The week closed with a jobs report that underscored the economy’s resilience while highlighting the data’s mixed nature.

The 272,000 jobs added in May were higher than the 190,000 economists expected. At the same time, wages rose 4.1 percent from a year ago. The strong jobs report and surprise wage increase supported the narrative that the Fed may now wait longer before considering a move on interest rates.⁴

Although inflation now exceeds the central bank’s 2 percent target, the jobs report suggests that economic growth remains powerful despite higher short-term rates.⁴

Footnotes and Sources

1. ^{The Wall Street Journal, June 7, 2024}
2. ^{CNBC.com, June 6, 2024}
3. ^{The Wall Street Journal, June 7, 2024}
4. ^{The Wall Street Journal, June 7, 2024}

Stocks edged lower in the final week of May as fresh news on economic growth and inflation failed to inspire investors.

Stocks Slide

Markets shrugged off news that the Q1 Gross Domestic Product was revised lower to 1.3 percent from the initial estimated 1.6 percent. Despite concerns that the economy was cooling faster than expected, investors didn’t believe the update was enough to influence the Fed’s decision about adjusting short-term rates.¹

On Friday, investors were on edge waiting for the update on inflation. The Fed’s preferred inflation indicator, called the personal consumption and expenditures (PCE), rose 0.2 percent in April, which was in line with forecasts.²

Stocks rose slightly in pre-market trading on the news but were under pressure throughout the day as investors digested the inflation update. But in the last hour of trading, stock staged a powerful rally led by the Dow, which had its best day of the year.

Is Bad News Good News?

On the economic front, last week’s news was generally disappointing. The update on Q1 GDP was a bit discouraging, and several Fed officials gave seemingly more hawkish updates. Also, the Fed’s “Beige Book” revealed modest economic growth nationwide.

Yet despite the drumbeat of bad news, stocks were resilient and closed only slightly lower for the holiday-shortened week.³

Footnotes and Sources

1. ^{CNBC.com, May 30, 2024}
2. ^{CNBC.com, May 31, 2024}
3. ^{Investors Business Daily, May 30, 2024}

Last week’s stock performance was mixed, following investors’ reaction to the Fed’s May meeting minutes, while a handful of mega-cap tech companies created a buzz with their news.

Market Splits

Stocks began trading in a narrow band last week. Still, mega-cap tech names rallied in anticipation of the Q1 corporate report from a key company that makes semiconductors for artificial intelligence (AI). The enthusiasm lifted the Nasdaq to fresh records.

Federal Reserve news mid-week unsettled investors, who reacted to Federal Open Market Committee meeting notes that stated some Fed officials worried over the lack of progress on inflation.¹

Technology was the sole winning group for the whole week, with all other Standard & Poor’s 500 industry sectors ending in the red.²

Bucking the Trend?

One of the handful of companies bucking the trend last week was Nvidia.

The semiconductor maker – the fifth largest company in the S&P 500 by market capitalization, thanks to their prominent role in AI – reported that its Q1 sales tripled from a year ago. The company also announced a 10-to-1 stock split. The news pushed its market cap to over $2 trillion.³

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities.

To some on Wall Street, Nvidia is the bellwether for the AI industry. By one estimate, the entire AI market is nearly $300 billion for this year – more than 3X the market’s size of $95 billion just three years ago. By 2030, that estimate may reach $1.8 trillion.⁴

Remember that forecasts rely on assumptions and may undergo revisions over time. Financial, economic, political, and regulatory issues may cause the actual results to differ from the expectations expressed in the forecast.

 

Footnotes and Sources

1. ^{The Wall Street Journal, May 22, 2024}
2. ^{Sectorspdrs.com, May 24, 2024}
3. ^{The Wall Street Journal, May 22, 2024}
4. ^{Statista.com, May 24, 2024}

Stocks notched a solid gain last week in a mega-cap, tech-led rally bolstered by positive inflation news.

Dow 40,000

The week began quietly as market averages traded in a tight range, awaiting fresh inflation news.

On Tuesday, markets rose steadily throughout the day after digesting a mixed wholesale inflation report.¹

The next day, a cooler-than-expected Consumer Price Index (CPI) report sparked a broad-based rally as the upbeat news raised investors’ hopes for a rate cut. The Nasdaq Composite and Standard & Poor’s 500 (which ended above 5300 for the first time) closed the day up 1.4 percent and 1.2 percent, respectively. Meanwhile, the bellwether 10-year Treasury yield fell to 4.35 percent.^2,3

Investors took a break as the week ended, mostly yawning at mixed economic data. Notably, the Dow closed just above 40,000 on Friday.

Footnotes and Sources

1. ^{CNBC.com, May 14, 2024}
2. ^{The Wall Street Journal, May 15, 2024}
3. ^{CNBC.com, May 17, 2024}

Stocks notched a solid gain last week as rate-cut expectations paced the rally as the Q1 earnings season wound down.

Stocks Climb Steadily

Monday opened with stocks picking up where they left off the prior Friday. Stocks were still basking in the afterglow of fresh jobs data, which eased investor concerns of an overheating economy. That and reports of a possible Middle East ceasefire fueled Monday’s rally.¹

Stocks hung out in a narrow trading band Tuesday and Wednesday, yawning at the sparse economic news and a handful of negative earnings results. By contrast, the Nasdaq edged lower over those two days.^2,3

On Thursday, the S&P 500 closed above 5,200 for the first time since early April. The next day, stocks rallied, and the Dow clinched its eighth consecutive day of gains, the longest winning streak since December and its best weekly performance this year. Fresh data showed consumers continue to have inflation concerns for the year ahead, which was unsettling.^4,5

Footnotes and Sources

1. ^{The Wall Street Journal, May 10, 2024}
2. ^{The Wall Street Journal, May 7, 2024}
3. ^{The Wall Street Journal, May 8, 2024}
4. ^{CNBC.com, May 9, 2024}
5. ^{The Wall Street Journal, May 10, 2024}

Stocks notched a solid gain last week, rallying behind upbeat earnings, a dovish Fed, and mixed economic data.

Stocks Pop, Drop, Then Rally

Markets began the week with an upward bump as positive news from some mega-cap tech companies outweighed disappointing updates from other tech names.

The tone quickly changed on Tuesday as higher-than-expected Q1 wage growth triggered inflation and interest-rate anxiety—just as the Federal Open Market Committee kicked off its third meeting of the year. Each of the three major averages dropped more than 1.5 percent on the last trading day of April.¹

When the Fed announced it was holding rates steady on Wednesday, stocks initially rallied on the news, but sellers got the upper hand late in the trading session, and prices ended the day slightly down.²

On Thursday, stocks trended higher as more companies reported upbeat Q1 results. Then, on Friday, stocks pushed higher after the April jobs report indicated that unemployment ticked up and the economy slowed. The 175,000 jobs created in April represented slower growth than the over 300,000 added in March and less than the 240,000 economists expected. Some Fed watchers believe that the news bolstered chances that the Fed may adjust rates sooner rather than later.³

Footnotes and Sources

1. ^{The Wall Street Journal, May 3, 2024}
2. ^{CNBC.com, May 1, 2024}
3. ^{The Wall Street Journal, May 3, 2024}

Last week opened with a rebound rally as investors breathed a sigh of relief that Middle East tensions had eased. The market rally extended into Tuesday, with investors cheering positive corporate earnings reports. By Tuesday’s market close, the S&P 500 had gained 2% for the week.^1,2,3

But investor enthusiasm didn’t last, as midweek saw profit taking in all three averages. Rising bond yields threw a wet blanket on market momentum; at one point, the yield on the 10-year Treasury note rose more than 40 basis points from its low earlier in the week.⁴

On Thursday, markets slipped on two fresh pieces of economic data: a Gross Domestic Product (GDP) slowdown and higher consumer prices. But by midday, selling pressure slowed. Stocks pushed higher on Friday behind upbeat Q1 reports from two mega-cap tech stocks, helping the S&P 500 and the Nasdaq post their best week since November.⁵

Footnotes and Sources

1. ^{The Wall Street Journal, April 26, 2024}
2. ^{CNBC.com, April 22, 2024}
3. ^{CNBC.com, April 23, 2024}
4. ^{CNBC.com, April 24, 2024}
5. ^{The Wall Street Journal, April 25, 2024}

Stocks fell for a third straight week, as Fed Chair Jerome Powell’s mixed but upbeat message could not offset the anxiety caused by the Middle East conflict.

Stocks Retreat

Markets began the week rattled by further escalation in the Middle East over the weekend. A bit of good news punctuated an otherwise sour Monday, as a stronger-than-expected retail sales report showed consumers were spending despite rising inflation.^1,2

On Tuesday, remarks from Fed Chair Jerome Powell indicated a shift in thinking—from being confident to not-so-confident about interest rate cuts in 2024. He said rates might need to stay higher until the Fed meets their 2% inflation target.^3,4

On Friday, the markets saw further declines, but investors were somewhat reassured by the perception that Thursday’s retaliatory actions in the Middle East were restricted in scope.⁵

Footnotes and Sources

1. ^{The Wall Street Journal, April 19, 2024}
2. ^{CNBC.com, April 15, 2024}
3. ^{The Wall Street Journal, April 16, 2024}
4. ^{CNBC.com, April 16, 2024}
5. ^{CNBC.com, April 19, 2024}

On Wednesday, the March Consumer Price Index (CPI) report rattled markets, revealing that inflation accelerated slightly more than expected. Bond yields rose, and stocks retreated in response, as investors feared the news could influence the Fed’s rate decision. The 10-year Treasury yield had its highest intraday jump in three years.^1,2,3

Markets rallied Thursday as investors were encouraged by the Producer Price Index (PPI) report, which measures inflation at the producer level. Unlike CPI, PPI rose less than expected, which sparked a tech-focused rally. Markets opened lower on Friday as investors wrestled with the conflicting inflation reports.

Fears of an escalating Middle East conflict also weighed on stocks during the week. Concerns about a potential weekend event led some investors to end the week in a risk-off position.⁴

Footnotes and Sources

1. ^{The Wall Street Journal, April 12, 2024}
2. ^{CNBC.com, April 10, 2024}
3. ^{The Wall Street Journal, April 11, 2024}
4. ^{CNBC.com, April 12, 2024}