US Equity Markets hit new highs last week though with narrow participation, as better-than-expected inflation data raised hopes that the Fed will cut interest rates. The S&P 500 hit fresh record highs, up 1.6% for the week to bring its gains for the year to 13.6%. The S&P 500 Equal Weight Index, which is more indicative of the broader market, actually fell 0.5% for the week and is now only up 3.7% for the year. The Nasdaq increased 3.2% for the week on strength in mega cap technology stocks and is now up 17.8% for the year, while the Russell 2000 (small cap stocks) fell 1.0% for the week and is now down 1.0% for the year.
Global Equity Markets declined last week, as investors reacted to surprising election results in France and increased talk of global tariffs hurt sentiment. Developed Markets dropped 2.6% for the week and are now up 2.7% for the year. Emerging Markets were up 0.4% for the week on a rebound in India, bringing its gains for the year to 5.2%.
US Interest Rates Drop as Inflation Data were cooler than expected. The Consumer Price Index (CPI) for May showed prices increased 3.3% from a year ago, better than expected and down from 3.4% in April. Core CPI, which excludes food and energy prices, were up 3.4% from a year ago, also better than forecasts and down from 3.6% in April. As a result, the yield on the US 10-Year Treasury dropped to 4.22% from 4.43% the prior week. Investors are now pricing in two rate cuts by the Fed between now and the end of the year, up from one cut the prior week.
Of Interest to Us
It is not unusual for the Fed to cut rates leading up to the US elections. The Fed has made interest rate changes in 5 of the last 8 Presidential election years with changes coming in the months of July, September, October, and November. It appears the Fed has historically engaged in policy that it thinks is appropriate for the economy and does not care about complaints that its decisions are made to influence the elections.
Market Data
for the week ending 6/14/2024
If you have questions about the markets or would like to talk about your investments, please contact me at bfontana@invtrust.com or via phone at 704.940.3544.
Investors Trust Company helps its clients make sound financial decisions by providing strategic advice and asset management services with a high level of personalized attention. If we may help you or your clients with their investment management needs, please contact one of our Relationship Team members at trust@invtrust.com.
