Markets were mostly positive with a blip later in the week. Is it all downhill from here or will there be some climbing ahead?
Monday S&P 500 0.10%| NASDAQ 0.28%
Trading kicked off the week, building off prior session all-time highs for the S&P500 and Nasdaq. Consumer credit figures came out for May, indicating that spending was stronger for the month (although on credit), which was attributable to seasonal spending trends.
Tuesday S&P 500 0.07% | NASDAQ 0.14%
Federal Reserve Chairman Powell was on Capitol Hill testifying before the Senate Banking Committee. He stated there has been modest progress towards their 2% annual inflation target and their policy stance should not neglect the unemployment mandate of the Federal Reserve. Unemployment has inched higher to 4.1% as reported in the first week of July. The Consumer Price Index figures for June will provide guidance on the direction of interest rate cuts.
Wednesday S&P 500 1.02% | NASDAQ 1.18%
Markets continued their climb into record territory as the 2nd day of Chairman Powell’s visit to the Hill ended. The 10-year Treasury fell to 4.28% with anticipation of a federal funds rate cut sooner rather than later.
Thursday S&P 500 -.88% | NASDAQ -1.95%
Good news for prices sent major indexes lower as Consumer Price Index (CPI)(Jun) for the month fell for the first time in 4 years. The 10-year treasury moved lower and there were big selloffs across the board, particularly in tech stocks. The Russell 2000 Index, which represents small cap stock companies, rose, which was seen as a move within portfolios seeking to rebalance their holdings after seven consecutive all-time highs in growth-oriented companies.
Friday S&P 500 0.55% | NASDAQ 0.62%
Friday opened with a slew of big bank earnings in which all companies reporting either met or exceeded forecasts. The Federal Reserve Bank recently performed their annual stress test to gauge the strength of 31 banks in a hypothetical economic downturn and it was determined there was “sufficient capital” in their assessment which eases the angst of limited access to borrowing.
Conclusion S&P 500 .86% | NASDAQ .27%
Markets enjoyed another positive week overall with one trading day of resistance. Much of the focus is shifting to 2nd quarter earnings and the timing of the first rate cut. Banks kicked off earnings season strong, which was a welcome sign. The Federal Reserve’s acknowledgment of those indicators helps strengthen the case for a rate cut in September, at the earliest. However, as they have repeatedly outlined in their public comments, they will make the decision based on the data to avoid telegraphing the direction of their policy.
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