ClientFirst Financial Strategies
Financial Planning and Portfolio Management
The US stock market indices came roaring back from its debacle a couple weeks ago with all three posting solid gains. Inflation and retail sales data reinforced the probability of a September rate cut and fueled the week’s bull run.
All three major US stock market indices were down last week. More than likely, Monday’s 12.4% plunge in Japan’s Nikkei spurred shockwaves in the US.
At this juncture, there’s no question that the Federal Reserve’s eleven rate hikes from March 17, 2022 through July 26, 2023 have taken effect in slowing the US economy. Friday’s reported unemployment rate increased to 4.3%, causing interest rates on the 10-year US Treasury Note to plunge from 4.19% last week to 3.79%.
For the second week in a row, the three major US stock market indices posted mixed results. Lower 2Q2024 earnings were largely to blame for stocks that pulled back.
The big news come Friday wasn’t a tech-bubble burst or election campaign scene. It was a software update glitch that took down everything from airlines to credit card companies…as well as the US markets!
Post July 4th holiday celebrations, a couple things became clearer:
1. The economy is slowing; and
2. Fed Chair Powell intonated when interest rates may decrease.
It was a quiet week on the stock market market front ahead of July 4th. It was also a quiet week for economic reporting, leaving Nvidia performance—down >2% last week but up 149% year-to-date—as the main market catalyst.
Although all three of the major US stock market indices produced slight gains last week and the S&P 500 breached a new high, it felt as though market momentum slowed!
Like Paul Revere’s famous warning, “The British are coming!,” many economists have been proclaiming, “The interest rate cuts are coming!” The US stock market certainly thinks so as both the S&P 500 and Nasdaq indices hit fresh highs again last week.
Is the stock market fueling the economy or vice versa? The May unemployment rate rose slightly to 4%, the highest level in 2 years. Yet the jobs market and overall economy seem to be holding steady. And check out stock market performance!