Market Perspective for June 23, 2024

This week was a critical one for investors as the Fed finally gave some guidance about the timing of the first interest rate cut. News releases unveiled this week also showed that the economy may finally be slowing enough to question whether a recession may be on the horizon.

On Monday, the Empire State Manufacturing Index came in at negative six. Although the figure was an improvement from the previous month, it still indicates a contraction in the manufacturing sector in New York.

On Tuesday, retail sale data came in below expectations. Analysts had predicted that core retail sales on a monthly basis would increase by .2 percent while overall retail sales were projected to expand by .3 percent. However, core retail sales actually fell by .1 percent while overall sales only went up by .1 percent.

The Juneteenth holiday meant that there was no major news on Wednesday, but there were plenty of major announcements on Thursday to keep market participants occupied. Unemployment claim data was released and revealed that 238,000 people applied for benefits during the last seven days. This was more than the analyst projections but below last week’s figure of 243,000.

Also on Thursday, building permit data came out and it was revealed that 1.39 million were issued in the past month. This was lower than the 1.45 million expected prior to the release. The data suggests that fewer homes are being built, which can put pressure on housing prices. Housing prices have been one of the key drivers of inflation over the past few years. However, on Friday, it was reported that existing home sales were 4.11 million, which beat the expectation of 4.08 million.

Also on Friday, Flash Manufacturing PMI and Flash Services PMI figures were made public. The Flash Manufacturing PMI came in at 51.7 while the Flash Services PMI came in at 55.1. This indicates that both the manufacturing and service sectors are expanding.

The Dow was up .84 percent this week to close at 39,150. On Tuesday afternoon, the market hit its low of the week of 38,765 while it hit its high of the week on Friday morning of 39,210.

The Nasdaq was up .43 percent this week to close at 17,869. The market would make its high of the week on Monday afternoon when it hit 17,924. On Friday morning, it hit a low of 17,664. As of the close of trading on June 21, the market is at both a yearly and all-time high.

The S&P 500 closed up 1 percent this week to finish at 5,464. As with the Nasdaq, the S&P is at both yearly and all-time highs. On Monday, the market would open at its weekly low of 5,426 while it hit its weekly high on Thursday of 5,503.

In international news, Switzerland announced on Thursday morning that it was cutting its interest rate to 1.25 percent from 1.5 percent. Also on Thursday morning, the Bank of England (BOE) announced that it was keeping its rate steady at 5.25 percent. It was expected that the BOE would cut its rate by 25 basis points.

It’s believed that the delay could have implications for the Fed as it relates to its own interest rate strategy. Fed officials have said throughout the week that there will likely be a rate cut in December. However, there was some speculation that a cut could come as early as September if economic news continues to come in weaker than expected.

Finally, the Royal Bank of Australia (RBA) announced on Tuesday morning that the nation’s interest rate would remain at 4.35 percent. Notably, the RBA said in its press conference that there was actually talk about raising rates as opposed to cutting them.

There will be several important news releases next week. Wednesday sees the reveal of gross domestic product (GDP) figures while the Core PCE Price Index comes out on Friday. In addition, inflation data from Australia and Canada is going to be released during the next five trading days.

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