Weekend Update, July 9th, 2024

Index, Sector & Asset Performance

The S&P 500 set a new all-time high close last Tuesday, and both the S&P 500 and the Nasdaq gained to add to first half of the year returns.  The S&P 500 rose +2%, with tech and communication services leading as they have for 18 months. The index rose above 5,500 for the first time and finished the week at a record high.

US equity markets closed out in 1H2024 with positive returns. The NASDAQ gained +18% while the S&P 500 rose +15%. There have been only 25 years with the S&P 500 up more than +15% in the first half of the calendar year. The resulting second half returns were positive 19 of the 25 years, with a median second half return of +8.9% relative to the unconditional median second half return of 7.3%, according to Goldman Sachs and BOA Securities.

Economic Indicators and Earnings Commentary

The most significant data last week was released on Friday, the U.S jobs report. More significant than the likely overstated June numbers, were revisions to May and April numbers that cut -111,000 new jobs in the last two months than previously calculated. Surprise? No. 13 out of 14 monthly government jobs data sets have been revised downward. Downward revisions lowered the three-month average pace of payroll gains to +177k from +249k as previously reported.

The minutes from the June 12th meeting of the Federal Open Markets Committee were released last week. FOMC members continue to require more evidence of lower inflation. However, a few members now appear concerned that years of elevated rates could be taking its toll on the economy, stressing that the Fed needs to be ready to respond quickly to any “unexpected economic weakness.”

The jobless rate continued to climb, rising a tick to 4.1%. The ISM Manufacturing and Services indices (surveys of business sentiment across the economy) came in below expectations.