Weekly Commentary (7/08/24) – Markets Start Second Half of ’24 on Winning Note

Most major market indices finished higher during last week’s holiday-shortened week.  

For the week, the DJIA gained 0.69% while the S&P 500 added 1.98%.  The tech-heavy Nasdaq shot up 3.51% (what’s new?).  International markets had a strong week as the MSCI EAFE index finished up 2.17% while emerging market equities (MSCI EM) added 1.96%.   Small company stocks, represented by the Russell 2000, continued to struggle and finished lower by 1.01%.  Fixed income, represented by the Bloomberg Aggregate, gained 0.71% for the week as yields moved lower. As a result, the 10 YR US Treasury closed at a yield of 4.28% (down ~ 8 bps from the previous week’s closing yield of ~4.36%).  Gold prices closed at $2,388.50/oz – up 2.61% as the U.S. dollar weakened 0.94% on the week. Oil prices rose a bit to close at $83.15 per barrel, up 1.99% on the week.    

Last week was a relatively quiet week for economic releases. The ISM Manufacturing Index fell to 48.5% in June vs. 48.7% in May, and the results were worse than the consensus estimate of 49.1%.  The contraction in manufacturing broadened as 62% of manufacturing GPD is shrinking.  Manufacturing has been in contraction for all but one month since October 2022.  Last Friday’s release of the June employment report showed headline payroll numbers expanding by 206,000, above the consensus of 200,000.  Government hiring accounted for most of the gain.  Offsetting the June gain were fairly large reductions to previously reported April and May employment gains.  June’s unemployment rate moved higher to 4.1% (the highest since November 2021).  The ISM and Employment reports were treated positively by Wall Street as bad news is good news as far as the Fed is concerned (higher likelihood of a rate cut in the months ahead).  

The week ahead holds a few important events that investors will be watching closely – June CPI comes out on Wednesday while PPI gets released on Thursday followed by the University of Michigan Consumer Sentiment Index on Friday.  Also, this week begins the release of 2nd quarter earnings with several big banks reporting on Friday.  A lot of good news has been baked into this market so earnings will have to be robust for the market gains to continue.  

We hope you had a great 4th!  Enjoy the summer!

“The best preparation for good work tomorrow is to do good work today.” -  Elbert Hubbard