Monday, July 15, 2024

Stock Market Index S&P 500 Reaches 5,600 Milestone in 2021’s Lengthy Bull Run: Market Recap

Technology Sector Lifts Stocks to Record Highs amid Powell’s Remarks

The surge in the world’s largest technology companies catapulted stocks to record highs, as traders shrugged off Jerome Powell’s remarks to Congress and continued to bet on Federal Reserve rate cuts this year.

The S&P 500 made history by surpassing 5,600 for the first time, thanks to a resurgence in mega-cap tech stocks. Nvidia Corp. saw a gain of over 2.5%, while Apple Inc. climbed on the announcement of plans to increase iPhone shipments by 10% following a challenging 2023. Treasury yields remained steady after a successful $39 billion sale of 10-year bonds. Market swaps are now pricing in two Fed cuts in 2024, with the first potentially happening in September.

Despite Powell’s testimony about the Fed’s intent to cut rates and the labor market cooling significantly, Wall Street remained focused on the upcoming consumer-price index report. The S&P 500 continued its record-breaking streak, jumping 1% for the seventh consecutive day. Gold and silver mining stocks surged on the back of Fed easing speculation, while banks underperformed. Google’s parent company Alphabet Inc. decided to halt its acquisition efforts for HubSpot Inc., sources revealed.

As market participants prepared for the CPI report, Powell emphasized that the Fed is not waiting for inflation to drop below 2% before implementing rate cuts. He acknowledged that the central bank still has work to do and hinted at a potential rate cut in September. This sentiment was echoed by Krishna Guha at Evercore, who stated that the Fed’s assessment of risks shifting could lead to a rate cut in the near future.

With market optimism prevailing despite the deluge of data, many investors are bracing for potential market volatility. The options market suggests that the S&P 500 Index could see a significant move following the CPI report, potentially the largest since June.

Looking ahead, market volatility may increase due to US political uncertainty, earnings season, and comments from the Fed chair. S&P 500 earnings for the second quarter are expected to be more diversified than in recent years, with the success of the quarter riding on a broader range of companies beyond just tech giants.

As the market awaits the outcome of the CPI report, investors are gearing up for potential shifts in market dynamics in the days and weeks ahead. The latest developments in major corporations like Microsoft, Intuit, and Advanced Micro Devices could also impact market sentiment going forward.

Overall, the market remains on edge as it navigates through a mix of positive earnings forecasts, Fed rate cut expectations, and geopolitical uncertainties. Stay tuned as investors await the results of the CPI report and brace for potential market volatility in the days ahead.

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