Traders work on the floor of the New York Stock Exchange on June 18, 2024.
Spencer Platt | Getty Images News | Getty Images
of S&P 500 rose to a fresh intraday high on Friday as traders digested price index data on personal consumption expenditures that showed slowing inflation as well as better-than-expected consumer sentiment numbers. They are also counting down to the end of the first half of the strong year.
Broad market index and Nasdaq Composite advanced by 0.3% each. The two averages hit all-time intraday highs earlier in the session. of Dow Jones Industrial Average added 60 points, or 0.2%.
Inflation in May slowed to its lowest annual rate in more than three years, the Commerce Department reported Friday. Core PCE, which excludes the more volatile food and energy prices, rose just 0.1% last month and 2.6% from a year earlier. Both estimates were in line with the Dow Jones consensus estimates. The headline PCE index is the Federal Reserve’s preferred measure of inflation. Headline PCE, which includes food and energy, was unchanged on the month and also rose 2.6% on an annual basis, also in line with expectations.
“From a market perspective, today’s PCE report was almost perfect,” said David Donabedian, chief investment officer of CIBC Private Wealth US “This was definitely a positive report.”
The consumer sentiment index for June came in higher than expected, rising to 68.2 from a preliminary reading of 65.6. The one-year inflation outlook fell to 3% from 3.3% expected in May.
Inflation statistics are considered important by market participants as they try to guess when the Federal Reserve will start cutting interest rates. Traders are currently pricing in a 59.5% chance the central bank will cut interest rates at the September meeting, according to the CME Group FedWatch Tool.
The market officially closes the first six months of 2024 with the closing bell on Friday.
Performance of the S&P 500, the 30-stock Dow and the Nasdaq Composite in 2024
The tech-heavy Nasdaq led the way in the first half, climbing about 20% as the artificial intelligence craze captured investor excitement. The broad S&P 500 jumped more than 15%, while the blue-chip Dow lagged behind with a gain of just 4%. Nvidia shares advanced 1% on Friday.
The artificial intelligence theme “has taken over this whole year and really driven the focus in the overall market,” said Mike Dickson, head of research and quantitative strategies at Horizon Investments. “This has resulted in a really strong year.”
Part of the reason for the Dow’s underperformance stems from an idiosyncratic pullback in the second quarter. The Dow has fallen more than 1% over the period, while the S&P 500 and Nasdaq have added more than 4% and 9%, respectively, over the same time frame.
All three gained ground in June. The Nasdaq once again led with an increase of more than 6%. The S&P 500 and Dow gained more than 4% and 1%, respectively.
For this week alone, the Nasdaq has advanced 1%. The S&P 500 rose about 0.6%, while the Dow advanced 0.5%.
“Capital markets have been resilient,” said John Luke Tyner, portfolio manager at Aptus Capital Advisors.
For the market to hit all-time highs in the back half of the year, Tyner believes the market will need more participation. He noted that events such as elections, the timing of rate cuts and signs of softening consumer demand could weigh on markets.
“If all of these things play out, we could see more volatility,” Tyner said. “Overall, everyone is enjoying the last 10 months of the market because it’s been easy, [but] at some point, complacency will have to end.”
Nike shares fell more than 19% after the athletic retailer cut its full-year guidance. Foot locker shares fell 2% in sympathy.