Weekly Market Commentary – 6/21/24

The holiday-shortened week saw the S&P 500 eclipse 5500 and hit its 31^st all-time high of the year.  Volumes were relatively light until Friday, when $5.5 trillion in derivatives expired and rolled in the next contract month.  Several investment banks increased their year-end price targets for the S&P 500 even as hedge funds moved to a more cautious stance.  Narrowing market breadth was also notable this week, as were lackluster results from about 21 billion in corporate bond sales.  However, a 20-year US Treasury auction saw strong demand.  Central bank policy and rhetoric came throughout the week.  The BOE left its policy rate unchanged but signaled a cut in August.  The Swiss National Bank surprised the street with a 25 basis point cut.  NVidia’s market cap surpassed Microsoft’s but regressed on volatile trade in the second half of the week.  Investors will pay attention to end-of-the-quarter rebalancing as they look to the second half of the year.  We expect an uptick of volatility as investors recalibrate expectations for global monetary policy and corporate earnings while assessing the ramifications of this year's Presidential election.

The S&P 500 gained 0.8%, the Dow outperformed with a 1.5% advance, the NASDAQ added 0.2%, and the Russell 2000 rose 0.7%.  Notably, the Bloomberg Aggregate Bond Index is now flat for the year.  US Treasuries came off a bit this week.  The 2-year yield increased by five basis points to 4.73%, while the 10-year yield rose by five basis points to close at 4.26%.  The US Dollar index traded 0.3% higher.  The Dollar/Yen cross closed the week at 159.53 as the Euro/Dollar cross fell to 1.0695.  Oil prices gained $2.63 to close at $80.70 a barrel.  Gold prices fell by $18 to $2331.60 an Oz.  Copper prices fell by $0.06 to $4.44 per Lb.  Of note, Bitcoin was sold over the week to close at $64,250. 

The economic calendar was quite busy.  May retail sales were weaker than anticipated and the prior month’s data was revised lower.  The headline number was 0.1% versus the expectation of 0.3%.  The Ex-autos figure came in at -0.1% versus the estimate of 0.2%.  Housing data showed continued weakness.  Housing Starts came in at 1277k versus the consensus estimate of 1375k.  Building Permits came in at 1386k, while the street was looking for 1445k.  May Existing Home Sales came in at 4.11m, just shy of the 4.14m expected.  Global Manufacturing PMIs generally were weaker than expected, especially in Europe.  However, US Manufacturing data was stronger than expected, and services showed the fastest pace of expansion in 2 years. Initial claims fell by 5k to 238k, while Continuing claims increased by 15k to 1.828M.