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.

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