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Upward Momentum Slows to Conclude a Hot First Half of the Year for Equities
The equity market’s upward momentum cooled last week but remained near record highs to end the first half of 2024. Global equities (represented by the MSCI All Country World Index) were up 0.13%, and domestic stocks (represented by the S&P 500 Index) were down a nominal -0.06%.
Personal Consumption Expenditures (PCE) Price Index
The core Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, slowed to an annual rate of 2.6% in May. This marked the slowest rate since March 2021 and significant progress down from the peak of 5.6% in 2022.
S&P 500
The S&P 500 produced a top-seven first-half performance in 2024 over the last 35 years with a gain of 15.29%. A majority of returns were attributed to the Magnificent Seven companies, similar to the trend in 2023. Even with a double-digit decline in Tesla’s stock, the Magnificent Seven still averaged a gain of 39% for the first half of the year.
Second Quarter Earnings Season
With the second quarter earnings season starting in the next few weeks, analysts estimate year-over-year earnings growth for S&P 500 companies of 8.8% according to FactSet. If positive, this would mark the fourth consecutive quarter of earnings growth.
Looking Forward
This week the labor market update for June will be reported. May produced a better-than-expected 272,000 new jobs compared to April’s 165,000 as well as a small uptick in wage growth.
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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