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US Stock Indices Hit Record Highs, Powered by Technology Giants

Los índices bursátiles de los EE.UU. alcanzan máximos históricos

US Stock Indices Hit Record Highs, Powered by Technology Giants:
The S&P 500 Index achieved its 54th all-time high this year,
driven by strong performance from major technology companies.
Meanwhile, Federal Reserve Governor Christopher Waller said he leans toward
voting for an interest rate cut in December, bolstering positive market sentiment.

Technology Stocks

Market and Index Performance

Room for Further Growth

Key Economic Data

Strong December Performance

Risks on the Horizon

Potential Volatility

Conclusion

Technology Stocks Propel US Indices to Record Highs

The significant rise in major technology stocks drove US indices to achieve new record highs.
This comes as Wall Street traders prepare for a series of economic data releases and Federal Reserve statements,
which are expected to play a critical role in shaping the future path of interest rates.

Market and Index Performance

The S&P 500 rose by 0.2%, while the Nasdaq 100 jumped by 1.1%.
In contrast, the Dow Jones Industrial Average fell by 0.3%.
Tesla led gains in the technology sector, while Apple shares hit new record highs.
Treasury yields for 10-year bonds increased by two basis points to reach 4.19%.
Additionally, the dollar broke a three-day losing streak following comments from President-elect Donald Trump,
who warned BRICS nations against attempts to replace the dollar.

Room for Further Growth

Despite the most substantial rally the S&P 500 has experienced since the dot-com boom,
the index still has room for further growth, according to Andrew Tyler of JPMorgan Chase.
Tyler noted that the most common options trades suggest the index could reach 6,200 and 6,300 this month,
with the index closing Monday slightly below 6,050.

Key Economic Data This Week

The jobs report due Friday is the week’s highlight.
The November employment report is expected to show a rebound
after hurricanes and strikes affected job growth in the previous month.
Additionally, Federal Reserve Chair Jerome Powell will participate in a discussion on Wednesday,
during which investors will watch for his assessment of the labor market
and inflation and hints about the December interest rate decision.
Tom Essaye of “The Sevens Report” described this week as “the last critical week for economic data in 2024.
” He added, “If the data is positive, investors could anticipate
a soft economic landing and an interest rate cut in December,”
which may support significant gains before the year’s end.

Strong December Performance with Caution of a Pullback

According to Sam Stovall of CFRA, December boasts the
second-highest average monthly return for the S&P 500 since World War II,
with a high advance rate and low standard deviation of returns, especially during election years.
However, Craig Johnson of Piper Sandler cautioned that the
stock market’s constructive trends rely on continued expansion in small-cap stocks, which could lift all sectors.

Risks on the Horizon for 2025

Despite the positive momentum, concerns loom that 2025 could present more significant challenges.
Ed Clissold of Ned Davis Research noted that markets recording 50 or more
all-time highs in a single year tend to decline the following year, with an average loss of 6.2%.

Potential Volatility and Investment Strategies

Matt Maley of Miller Tabak remarked, “Despite concerns about markets reaching peak levels,
most investors don’t see this as a real threat until next year.”
However, he warned that such complacency could lead to sudden pullbacks,
though clear signs of a downturn have yet to emerge.

Conclusion

While current forecasts remain optimistic,
the new year will require balanced investment strategies and realistic risk assessments,
especially given the possibility of market corrections during the first half of 2025.

US Stock Indices Hit Record Highs, Powered by Technology Giants

Technology Stocks Performance: Technology and Monetary Policy Impacts

Technology Stocks Performance: Technology and Monetary Policy Impacts: The U.S. stock markets have witnessed significant changes recently,
driven by large-scale sell-offs in major technology stocks, which negatively impacted vital indices.
On the other hand, recent economic data has bolstered the Federal Reserve’s cautious stance on interest rate cuts.
Despite these challenges, U.S. stocks have demonstrated resilience and outperformed their global peers.

Contents
Technology Stocks Performance
Describing the Tech Turmoil
Economic Data and Interest Rate Outlook
U.S. Stock Market Forecasts
U.S. Market Outperformance Internationally
Seasonal Trends and Momentum
Global Flows and Election Impacts

Technology Stock Performance and Market Indices

The sell-off halted a seven-day rally that had propelled the S&P 500 to record highs.
Bloomberg’s Magnificent Seven Index, comprised of
Meta, Tesla, Nvidia, Microsoft, Amazon, Alphabet, and Apple declined by approximately 1%,
led by Nvidia’s losses.
Dell and HP shares dropped by over 11%, disappointing investors anticipating a recovery in the personal computer market.
Additionally, CrowdStrike Holdings Inc.’s stock fell by 4.5% after issuing weaker-than-expected earnings forecasts.

Describing the Tech Turmoil

Jonathan Krinsky of BTIG described the current situation as “tech turmoil,”
highlighting concerns about the relative underperformance of technology stocks for 2025.
However, he noted a positive aspect: a shift in momentum toward other market sectors,
helping to maintain trading diversity.

Economic Data and Interest Rate Outlook

Economic data revealed an increase in the Federal Reserve’s preferred core inflation
measure in a light trading session ahead of the Thanksgiving holiday.
Although it aligned with expectations, core personal consumption expenditures rose by 2.8% compared to October of last year.
Separate data indicated that the economy continues to expand at a robust pace.

These figures support recent comments from Federal Reserve officials,
emphasizing that there is no urgent need to cut interest rates as long as the economy keeps expanding and the labor market remains strong.

Brett Kenwell from eToro noted that overall inflation is moving in the right direction but added,
“The lack of more definitive moves could lead investors to reassess their bets on future interest rate cuts.”

On the other hand, Quincy Krosby from LPL Financial highlighted that
“recent efforts to stabilize prices have faced challenges due to persistent inflation and adverse conditions impeding progress.”

U.S. stock markets experienced declines, with the S&P 500 down 0.4%,
the Nasdaq 100 dropping 0.9%, and the Dow Jones Industrial Average slipping 0.3%.
Meanwhile, yields on 10-year U.S. Treasury bonds fell by five basis points to 4.25%.

Conversely, the Bloomberg Dollar Index dropped 0.6%, while Bitcoin registered gains.

U.S. Stock Market Forecasts

JPMorgan Chase’s equity strategy team, led by Dubravko Lakos
Bujas, after the departure of long-time leader Marco Kolanovic in 2024,
adopted a positive outlook on U.S. stocks.
Lakos-Bujas set a new year-end 2025 target of 6,500
points for the S&P 500, exceeding Bloomberg’s average forecast of 6,300 points.

He noted, “The ongoing geopolitical uncertainty and evolving policy agendas
add significant complexity to the outlook.
However, opportunities are likely to outweigh risks.”

U.S. Market Outperformance Internationally

The S&P 500 has risen nearly 25% in 2024,
achieving multiple record highs and significantly outperforming the MSCI World Ex-USA Index.
The valuation gap between U.S. and international stocks has widened,
U.S. equities trading at a 60% premium based on forward price-to-earnings ratios.

Seasonal Trends and Momentum

After achieving its 52nd record high this year, the S&P 500 appears to be taking a pause.
Seasonal trends suggest continued momentum. Since 1950,
the index has posted an average gain of 1.8% between Thanksgiving
and year-end, ending positively in 70% of cases.
Adam Turnquist of LPL Financial highlighted that when the index is up
for the year by Thanksgiving, the average year-end gain increases to 2.1%, with a 75% likelihood of positive outcomes.

Global Flows and Election Impacts

Emmanuel Cau of Barclays noted increased U.S. equity inflows post-elections and a resurgence in retail trading activity.
Meanwhile, European equities have faced sustained selling pressure.
Despite strong U.S. inflows from long-term and retail funds,
Cau observed limited profit-taking by hedge funds and systematic strategies.
He concluded that investor sentiment has not yet fully aligned with the broader market recovery,
indicating that optimism remains somewhat constrained.

Technology Stocks Performance: Technology and Monetary Policy Impacts

Stock Market Collapse Puts S&P 500 on the Verge of Correction

Stock Market Collapse Puts S&P 500 on the Verge of Correction: Global financial markets have recently experienced significant volatility,
with major stock indices suffering sharp declines amid fears of an impending economic recession.
The U.S. financial markets, in particular, have seen drastic movements,
raising questions about the future of the economy and financial markets.

Contents

Largest Decline in Two Years

Worst Start of the Month

Market Volatility

The Economy Isn’t in Crisis

SoftBank Value Decline

Caution Regarding Stocks

Potential for Higher Returns

The Fed is Late

Markets Getting Ahead

Conclusion

Largest Decline in Two Years

The S&P 500 index experienced a significant collapse, losing about 3% of its value.
It continued its stumble with an 8.5% decline from its peak.
Meanwhile, the 10-year U.S. Treasury yields remained unchanged at 3.78% while the dollar fell.

Worst Start of the Month for the Nasdaq 100 Since 2008

The Nasdaq 100 technology index had its worst start to the month since 2008.
At one point during the session, the “Wall Street Fear Gauge” (VIX) also saw its highest rise since 1990.

Market Volatility

Renewed talk of a potential economic recession affected the U.S. financial markets,
sparking warnings that this year’s significant stock market rally might have gone too far.
Stock indices collapsed from New York to London to Tokyo.

The Economy Isn’t in Crisis… But

Despite growing concerns, some experts believe the economy isn’t in crisis, at least not yet.
They argue that the Federal Reserve risks losing some of its capabilities
if it doesn’t better acknowledge the cracks in the labor market.

SoftBank Value Decline

In Japan, the sell-off wave caused the Topix index to drop by 12%,
leading to a loss of about $15 billion in SoftBank Group’s value.

Caution Regarding Stocks

With increasing concerns about an economic slowdown,
some prominent investors have heightened their warnings about market risks.
Experts predict that stocks will remain under pressure from weak business activity,
falling bond yields, and deteriorating earnings forecasts.

Potential for Higher Returns

Following a robust first half, some analysts believe the market is overstretched in the short term.
They expect that markets will see a typical 9% pullback at some point,
though stocks may still rise by the end of the year.

Feeling That the Fed is Late

Amid ongoing volatility, some investors feel the Federal Reserve
has been late in cutting interest rates, increasing the likelihood of additional fluctuations in the future.

Markets Getting Ahead of the Fed

Some experts believe the markets are again getting ahead of the Federal Reserve in the current turmoil.
They note that economic data suggest the U.S. economy has hit an “air pocket,”
making a rate cut in September almost certain.

Conclusion

Financial markets continue to face sharp fluctuations,
with growing concerns about economic recession and slowing growth.
As investors monitor economic and financial developments,
markets remain prone to further volatility in the future.

Stock Market Collapse Puts S&P 500 on the Verge of Correction

Nvidia’s Fluctuations Reflect on U.S. Stock Indices

Nvidia’s Fluctuations Reflect on U.S. Stock Indices: U.S. stock indices closed in the green as Nvidia’s stock rebounded by the end of trading.
At the same time, the S&P 500 index is on track to achieve gains of about 15% since the beginning of the year.

Contents

Performance of U.S. Stock Indices
Market’s Reliance on Major Tech Stocks

Movements of the S&P 500 Index

Treasury Yields and the Dollar

Regret Over Missed Opportunities

Expectations for the Second Half of the Year

New Market Leadership

Future Outlook for AI Investment

Annual Performance of the S&P 500 Index
Performance of Key Indices

Performance of U.S. Stock Indices

U.S. stock indices rose in the final stages of a strong quarter that saw a sharp rise in the prices of a small group of tech companies leading the market.
A new wave of volatility hit Nvidia Corp’s stock, which rebounded just minutes before the market closed.
The company’s stock, at the heart of the AI hype, is experiencing volatility and largely guiding the market’s direction.
Meanwhile, Amazon.com’s market value reached two trillion dollars after the e-commerce giant’s stock hit a record high.

Market’s Reliance on Major Tech Stocks

The market’s recent attempt to rise without relying on major tech stocks was short-lived.
Several indicators show continued weakness in market breadth,
increasing uncertainty about the rally’s sustainability.
According to Bloomberg Intelligence, the S&P 500 index‘s performance and breadth divergence reached one of the worst levels in three decades.

David Bahnsen of the Bahnsen Group stated, “Ultimately,
the market still heavily relies on major tech stocks.
Whether last week’s tech stock volatility is the start of something deeper or not,
excessive investor sentiment, euphoria, and exaggerated momentum always end the same way.”

Movements of the S&P 500 Index

The S&P 500 index moved near the 5480-point level. FedEx Corp’s stock rose by 15% due to bullish forecasts and stock buyback plans.
The KBW bank index fell ahead of the Federal Reserve’s annual stress test results.
Micron Technology will announce its earnings after the market closes.

Treasury Yields and the Dollar

Treasury yields for 10-year bonds rose to 4.3%. A $70 billion five-year bond auction showed signs of strong demand.
The dollar hit its highest level since November.
The decline of the yen to its lowest level since 1986 has increased expectations of intervention.

Regret Over Missed Opportunities

Craig Johnson of Piper Sandler said, “There are warning signs lit up in the market as we head into the hot summer months.
Investors in major tech stocks are driven by the fear of missing out.
In contrast, investors in the rest of the market regret missed opportunities,
given the continued weakness in overall market breadth outside a handful of large stocks.”

Expectations for the Second Half of the Year

The S&P 500 index is on track for a strong positive performance in the first six months of the year,
driven by rising prices of the largest stocks in the market.
According to Jack Ablin of Cresset, when breaking the index stocks into fixed slices by market cap,

the larger the stock, the better its performance.

Ablin explained, “Much of the disparity is attributed to a higher-for-longer interest rate environment.
Investors believe that large tech companies, with their ability to generate cash,
are less dependent on borrowing, and companies that need to borrow have much easier access to capital than their smaller counterparts.
So, where are the markets heading in the second half of 2024?”

Ablin expects the market’s rally to broaden later this year with a focus on potential interest rate cuts.
He added, “High-quality companies, especially those with consistent dividend growth,
are likely to continue leading their lower-quality counterparts in an increasingly constrained borrowing environment.”

New Market Leadership

Bloomberg Intelligence’s sector rotation model suggests it’s time for new leadership to emerge,
favoring energy, healthcare, and financial sectors as the best sectors to lead the index in the second half.

Bloomberg Intelligence strategists, led by Gina Martin Adams, wrote,
“Technology and the tech-related communications sector have the strongest price momentum,
but declining earnings dominance and relatively high multiples have dropped both groups to the bottom of our rankings.”

Future Outlook for AI Investment

Mark Haefele of UBS Global Wealth Management said that while Nvidia’s fluctuations have driven market trends,
the structural investment case for AI remains intact regarding positive AI adoption and monetization trends.
Haefele maintains a constructive view on market breadth amid strong fundamentals.

He added, “We maintain our positive outlook on the AI story,
but adjusting the exposure to the tech sector is key to overcoming volatility while
maintaining strategic exposure to technology that we believe is poised to lead growth in the coming years.”

Second Quarter Earnings Prospects

According to Ryan Grabinski of Strategas, for the second quarter earnings season, major companies,
“the magnificent seven” are expected to represent the bulk of the growth in the S&P 500 index overall.

He explained, “What remains encouraging for us is the improved estimates for the remaining 493 companies starting from the third quarter,
with growth rates for both the top and the rest of the market returning to normal,”
and “If this expansion comes to fruition, it will be an encouraging sign for the sustainability of the bull market.”

Annual Performance of the S&P 500 Index

The S&P 500 index is on track to enter the second half with gains of about 15% since the beginning of the year.
According to data collected by Bespoke Investment Group,
July has been the strongest month for the index’s performance throughout the year since its inception and over the past two decades.

Bespoke noted, “What is more interesting is that looking at the outperformance over the past twenty years,
July’s outperformance was the eye of the storm.
July is sandwiched between June, August, and September, all classified as the worst three months of the year,
with average declines of 0.17%, 0.10%, and 0.7%, respectively.”

Performance of Key Indices

S&P 500 index rose by 0.2% at 4 PM New York time

The Nasdaq 100 index climbed by 0.3%

Bloomberg Dollar Spot Index increased by 0.4%

Bitcoin’s price dropped by 1.5% to $60,968.31

Ether’s value stabilized at $3,408.48

Gold’s spot price fell by 0.9% to $2,298.61 per ounce

Nvidia’s Fluctuations Reflect on U.S. Stock Indices

S&P 500 Index Approaches Historic Levels with Support from Nvidia

S&P 500 Index Approaches Historic Levels with Support from Nvidia: The S&P 500 index is approaching the 5490-point level,
marking the 31st record high this year.
In this context, 10-year Treasury yields fell seven basis points to 4.21%.
Bank of America’s institutional clients continued to invest in U.S. stocks for the second consecutive week.

Content

Rising Semiconductor Stocks

Bond Rally

Mixed Data

Infusion of Funds into the Stock Market

Hedging Against Risks

Rising Semiconductor Stocks

The rise in semiconductor stocks has driven Wall Street stock indices to another record high,
with traders betting that the Federal Reserve’s potential interest rate cuts will continue
to fuel the industry that has boosted the stock market this year.
The S&P 500 index approached the historic 5500-point level.
Nvidia became the most valuable company in the world, surpassing Microsoft and extending its record stock gains for the year.
An optimistic analyst predicted that the company’s value, which is at the heart of the AI boom,
could reach nearly $5 trillion next year, up from about $3.3 trillion.

Bond Rally

Bonds surged as traders flocked to buy $13 billion worth of 20-year Treasury bonds.
Wall Street saw the release of mixed economic data showing increased U.S. industrial production,
supported by a broad-based recovery in factory output. Retail sales rose sharply, with previous months’ figures being revised downward.
Federal Reserve officials emphasized the need for evidence that inflation has subsided before cutting interest rates.

Mixed Data

Anthony Saglimbene of Ameriprise said, “Investors should look at the half-full glass but recognize macroeconomic conditions,
as well as the nuances between corporate and consumer earnings and incoming economic data,
may develop in ways that could lower asset prices in the near term.”
The S&P 500 index is approaching the 5490-point level, marking the 31st record high this year.
Nvidia’s stock rose 3.5% after Rosenblatt Securities analyst Hans Mosesmann raised the target price
for the chipmaker to the highest on Wall Street at $200, up from $140.
Ten-year Treasury yields fell seven basis points to 4.21%.

Infusion of Funds into the Stock Market

Institutional clients of Bank of America continued to invest in U.S. stocks for the second consecutive week,
focusing on technology and social media stocks, according to strategists, including Jill Carey Hall,
in a note to clients.
Separately, a bank survey showed that global investors will likely continue pouring money into record-breaking stock markets.
When asked about the asset class that would benefit most from reallocating money market funds,
32% of participants chose U.S. stocks, 19% said the funds would go to global stocks,
and a quarter indicated they would buy government bonds.

Hedging Against Risks

There is currently little significant doubt in the market
that could curb enthusiasm for rising U.S. stocks supported by a small group of tech stocks.
However, some investors are increasingly seeking ways to hedge against concentration risks.
With the market hitting new records, this concentration becomes more pronounced.
Companies called “The Magnificent Seven” (Microsoft, Nvidia, Apple, Meta, Amazon, Alphabet, Tesla)
have contributed more than 60% of the S&P 500 index’s returns this year.

S&P 500 Index Approaches Historic Levels with Support from Nvidia

S&P 500 Achieves 30th Record of 2024 Amid Megacap Rally

S&P 500 Achieves 30th Record of 2024 Amid Megacap Rally: The S&P 500 index has achieved its thirtieth record of the year,
driven by significant gains in major technology stocks.
This comes when Treasury bonds have declined amid a wave of high-quality corporate bond sales and growing optimism about the resilient U.S. economy.

Contents

Market Performance

Economic Optimism

Performance of Technology Companies

Impact of Regulations

Raising Expectations

Hedge Fund Caution

Monitoring Federal Reserve Statements

Market Expectations

Focus on Earnings Expectations

Correlation Between Stock Prices and Bond Yields

Market Performance

The index surpassed the 5,470-point level, driven by substantial gains from Tesla and Apple.
The Nasdaq 100 index rose by 1.2%, nearing the 20,000-point level.
At the same time, Treasury bonds declined amid a wave of sales of high-quality corporate bonds totaling over $21 billion,
led by Home Depot, ahead of the Wednesday holiday.

Economic Optimism

Optimism about the resilient economy and improved corporate earnings has increased stocks by about 15% this year.
Additionally, easing inflation and enthusiasm for artificial intelligence have propelled stocks higher.
James Demmert of Main Street Research believes the S&P 500 index could reach 6,000 points by the end of the year.

Performance of Technology Companies

The index surpassed the 5,470-point level, driven by substantial gains from Tesla and Apple.
The Nasdaq 100 index rose by 1.2%, nearing the 20,000-point level.
Micron Technology shares rose to a record high, while Broadcom shares jumped more than 5%.

Impact of Regulations

Local reports in South Korea indicate that new regulations are scheduled for implementation next month
could force exchanges to reduce the number of tokens available to investors.
This has raised concerns among some traders and contributed to broad market sell-offs.

Raising Expectations

Citigroup strategists have raised their expectations for the S&P 500 index 2024 to 5,600 points.
Similarly, Goldman Sachs Group strategists, led by David Kostin, have boosted their target for the index to 5,600 points.
Julian Emanuel of Evercore has increased his year-end forecast for the index to 6,000 points.

Hedge Fund Caution

Hedge funds have reduced their total long and short leverage, which measures their overall market exposure,
by the most since March 2022. This move indicates a more cautious stance by so-called smart money.

Monitoring Federal Reserve Statements

Traders are closely watching statements from Federal Reserve officials regarding interest rates.
Philadelphia Federal Reserve Bank President Patrick Harker stated that he sees one interest rate cut as appropriate this year.

Market Expectations

With medium-term expectations from Federal Reserve officials calling for one interest rate cut this year,
cash flows into stocks that benefit from lower borrowing costs.
The question now for investors is what the market will do when the Federal Reserve eventually cuts interest rates.

Focus on Earnings Expectations

Many stocks are now more sensitive to weak growth conditions.
Morgan Stanley strategists say that some value stocks have
started to focus more on earnings expectations and less on the impact of interest rates.

Correlation Between Stock Prices and Bond Yields

The correlation between stock prices and bond yields continues to reverse and is the most negative since 1997.
This suggests the possibility of a significant shift in the inflation regime,
with stock prices and bond yields remaining highly sensitive to inflation trends.

S&P 500 Achieves 30th Record of 2024 Amid Megacap Rally

S&P 500 Index Hits New Record as U.S. Inflation Slows

S&P 500 Index Hits New Record as U.S. Inflation Slows: The S&P 500 index reached an all-time high as U.S. inflation slows down,
reflecting investors’ confidence in the continued rise of U.S. stocks during the second half of 2024.
Below are the performance details and forecasts for the S&P 500 index and the key sectors influencing it.

Content

S&P 500 Stock Performance

Slowing U.S. Inflation

Recent Performance of S&P 500 Stock
Funds Rush into Technology Stocks

Stock Valuations

Increasing Evidence of Reduced Price Pressures

Data Boosts Rate Cut Bets
Performance of Major Indicators

S&P 500 Stock Performance

U.S. stock indices hit all-time highs, benefiting from the rise in technology stock prices,
while Treasury yields fell amid bets that the Federal Reserve will cut interest rates this year amid signs of slowing inflation.
The stock indices rebounded after a brief decline,
and the S&P 500 index reached an all-time high for the fourth consecutive time, recording its 29th record high this year.
Treasury bonds of all maturities rose, pushing the 10-year bond yield below 4.3%. A $22 billion sale of 30-year debt saw strong demand.
Increased political risks in France pushed the premium on the country’s 10-year bonds to its highest level since 2017 compared to their German counterparts.

Slowing U.S. Inflation

U.S. producer prices unexpectedly fell in May by the largest amount in seven months,
indicating that inflationary pressures are moderating.
Many categories used to calculate the Federal Reserve’s most closely watched inflation gauge,
the Personal Consumption Expenditures (PCE) price index, saw smaller declines in May than the previous month.
Bill Adams of Comerica Bank, who expects the Federal Reserve to cut interest rates in September and December,
said: “The latest available data gradually opens the door for the Federal Reserve to start cutting interest rates later this year.”

Recent Performance of S&P 500 Stock

The S&P 500 index surpassed the 5430-point level to a new high.
Tesla shares jumped after Elon Musk said shareholders supported his compensation package.
Broadcom led the rise in chipmaker stocks after announcing strong earnings and a 10-to-1 stock split.
GameStop shares surged after a post by Keith Gill, also known as “Roaring Kitty,” on X.
The 10-year Treasury bond yield fell eight basis points to 4.24%. Beyond the political tensions in France,
EU bonds took a hit after bets on their imminent inclusion in major sovereign indices failed,
undermining the bloc’s efforts to broaden the appeal of its debt.

Funds Rush into Technology Stocks

Fear of missing out on the tech stock rally has spread among active investment funds.
Investment funds have increased their positions in technology stocks
since the beginning of 2024 to capitalize on their rising prices while reducing exposure to all other sectors.
This has pushed the group’s weight to an all-time high, according to data compiled by Barclays strategists.
On the other hand, JPMorgan’s asset management division expects the historically
strong start to the U.S. stock market to extend into the second half of 2024.
While this move may seem more like a challenging journey than a rocket ride after
the S&P 500 index has risen more than 10% since January, strong earnings,
the end of the Federal Reserve’s tightening campaign,
and economic strength will continue to lift U.S. stock indices in the coming months,
according to strategists led by David Kelly, who recommended buying large-cap stocks and a mix of value and growth stocks.

Stock Valuations

Major U.S. stocks appear more expensive compared to bond markets than at any time in the past two decades,
although this may not mean much for stock returns and does not necessarily indicate a bubble,
according to Bloomberg Intelligence strategists led by Gina Martin Adams.
They wrote: “The latest historical precedent shows that relative value is a poor indicator of returns.”
According to Bloomberg Intelligence, stocks spent most of the bull market in
the 1980s and 1990s at worse relative value levels and still posted significant annual growth.
Valuation excesses also appear only through market capitalization weight,
with the equal-weight index approaching pre-pandemic levels and relative valuations of nine of the 11 below-average sectors.

Increasing Evidence of Reduced Price Pressures

Traders have continued to monitor the macroeconomic picture closely.
U.S. producer prices unexpectedly fell in May by the largest amount in seven months,
indicating that inflationary pressures are moderating.
Many categories used to calculate the Federal Reserve’s most closely watched inflation gauge,
the Personal Consumption Expenditures (PCE) price index, saw smaller declines in May than the previous month.
The producer price index data followed a weak consumer price report,
providing some reassurance about progress toward the Federal Reserve’s 2% inflation target.

Data Boosts Rate Cut Bets

U.S. monetary policy officials are expected to cut interest rates only once this year and anticipate more cuts next year,
reinforcing calls by policymakers to keep borrowing costs high for longer to suppress inflation.
The Federal Reserve’s “dot plot” showed that four policymakers did not expect any cuts this year,
while seven expected only one cut and eight anticipated two cuts. Krishna Guha of Evercore said:
“This is still just one month’s data.
The takeaway from the June Federal Reserve meeting is that it will take a more sustained downward
shift over several more months for the Federal Reserve to act on rates.”
He added that this is exactly the type of data Jerome Powell needs to guide the cautious Federal Open Market Committee toward two rate cuts.
The most closely watched inflation index by the Federal Reserve is expected to show the smallest
increase since November after two better-than-expected price reports this week.
Many analysts predict the core PCE price index, due later this month, will rise by only 0.1% in May.
Such numbers would help strengthen the case for two rate cuts this year.

Performance of Major Indicators

The S&P 500 index rose by 0.2% at 4:01 PM New York time.
The Nasdaq 100 index climbed by 0.6%.
Bitcoin fell by 2.1% to $66,632.76.
Ether value dropped by 2% to $3,482.52.
The gold price in spot transactions decreased by 0.9% to $2,303.53 per ounce.

S&P 500 Index Hits New Record as U.S. Inflation Slows

The S&P 500 index reaches its highest level

The S&P 500 index reaches its highest level: Bets on a rate cut and a rise in technology stocks led Wall Street to end Friday trading sessions at its highest level ever.
The rise in shares of the most influential technology companies in the S&P 500 index led to the index rising
to its highest level ever in two years, as the index exceeded the level of 4,800 points.

Topics

Friday performance

Stocks rose on Friday as lower volatility in Treasury prices continued to suggest risk appetite on Wall Street.
The sentiment was also lifted slightly by what many described as a “Fed-friendly” report
that showed a combination of rising consumer confidence and falling inflation expectations.
“As inflation eases in 2024, there is a lot more good news than bad in terms of economic fundamentals,” Art Hogan at B Riley Wealth.
“We see a possible path to a gradual and sustained decline in inflation,
an end to Fed rate hikes, and further acceleration of economic growth in the second half of 2024.”

S&P 500 Index

After hitting its lowest point in October 2022, the S&P 500 index rose 35% to its highest level in history, reaching 4,796.5 points.
If we look at the history of the index, it is possible that the index could see larger gains.
The index had logged 512 trading days through Thursday without setting a record, the sixth-longest winning streak since 1928.
According to Ned Davis Research, the index recorded 13 gains in 14 trading sessions, a rate of 13% in the 1
period. Deadline, one year after registration.New entry.
“The path of least resistance in the stock market appears to be higher until consumer spending declines
and/or the labour market collapses,” said Nicholas Bonsack of Strategas.
“As long as there is no slowdown in the equity markets, we remain optimistic as we increased our equity exposure towards the end of the year,
but we expect the same group that led the market last year. The latter, the G7, continues to grow.

Magnificent Seven

While the S&P 500 index rose 1% to offset last week’s losses,
The Nasdaq 100 index, which includes stocks of the largest technology companies, has almost doubled. Shares of
Advanced Micro Devices also hit a record high, with Nvidia shares gaining the most among high-tech stocks.
While the yield on the 10-year Treasury note remained unchanged, the price of the dollar fell.

US Stocks

The United States is so tight while stock markets have surprised investors with new highs,
the activity continues to hide increasing divergence beneath the surface that suggests ongoing “technical illness,”
according to Dan Wantrupski from Janney Montgomery Scott,

Such aggressive leadership represents a return to last year (Megacap/AI/G7)
and we believe a period of increased volatility will soon begin in this case,” Wantrupski added.
The combination of better-than-expected economic growth and a significant improvement in inflation
giving the Fed the flexibility to cut interest rates – gives UBS’s investment office more

confidence in the base case scenario of a soft landing for the economy.
While this positive result is widely appreciated in the stock market,
gains in the market may be a little longer in coming, the company notes.
“The S&P 500 price targets for June and December are 4,900 and 5,000, respectively,”
said David Lefkowitz of UBS Global Wealth Management.

He added: “We maintain a neutral bias towards US equities in our tactical asset allocation.
In our view, and given the S&P 500’s exceptional valuations, we expect accelerating earnings growth
to be a key driver of the more moderate growth we expect.

Stocks expectations

Double-digit growth in stock prices in 2023, led by big capitalists, means the growing share of the index
is more closely linked to long-term earnings prospects
and therefore more sensitive to rising yields.
Against the background of persistent inflation fears, the positive correlations between stocks and bonds have strengthened again.
Since last August,
the 60-day correlation between the S&P 500 index and benchmark Treasuries has returned to positive,
affecting the security’s hedging function.
“The good news is that the market has done well to overcome some extremes in prices and sentiment,
correcting them over time and causing stocks to turn around rather than face strong selling pressure,”
Keith said Learner from Trust Advisory Services.

“Economic growth, profits and credit continue to show resilience. »
“Three key factors weighed on the ratings: avoiding a recession in 2023,
a reversal of Federal Reserve measures to reduce borrowing costs and rising profit expectations in 2024.”
said Rob Swankey of the Commonwealth Financial Network.
“However, interest rates are significantly higher than at the start of 2022 and earnings expectations for 2024 are already high,
so expectations need to be tempered,” he noted.

Traders also closely followed the comments of politicians who spoke ahead of the Fed meeting
hours before the traditional communications blackout.
Three Fed officials stressed on Friday that available data will influence their decision to cut interest rates,
saying they have not yet seen enough evidence to cut rates.

Market Movement

The S&P 500 rose 1.2%, while the Nasdaq 100 rose 2%. As for the performance of cryptocurrencies, it was as follows:

The price of Bitcoin rose by 1.4%, reaching $41,638.5, while the price of Ethereum reached $2,479.65 after rising by 1%,

while gold settled at $2,028.23 per ounce after rising by 0.2% in spot transactions.