Weekly Market Performance — June 21, 2024

Additional content provided by Brian Booe, Associate Analyst, Research.

LPL Research provides its Weekly Market Performance for the week of June 17, 2024. U.S. stock markets climbed to start the week but wobbled a bit in the second half of a holiday-shortened week. Big tech continued to soar until momentum slowed on Thursday and Friday, spreading to global markets, but U.S. indexes still ended mostly higher for the week. Treasuries continued to experience elevated volatility in reaction to mixed economic data releases. Oil prices rose as reports stated that crude and gasoline stockpiles declined more than expected.  

Stock Index Performance

S&P 500 Index Sectors

Fixed Income and Commodities

Source: LPL Research, Bloomberg 06/21/24 @ 3:25 p.m. ET
Disclosures: Indexes are unmanaged and cannot be invested in directly.

U.S. and International Equities

Markets: Major U.S. equity indexes continued to print new highs early this week thanks to big tech, but stumbled in the last two sessions. The S&P 500 reached its 31st record close of the year on Tuesday, and managed to hold on to a gain of about 0.6% on the week. The tech-heavy Nasdaq composite was flat on the week after also notching fresh highs, and the Dow was up around 1.5% after being the only major index in the red the prior week. Value stocks outperformed their growth counterparts in the last five sessions based on the Russell 1000 Growth versus Value indexes, and small caps rallied as the Russell 2000 Index advanced nearly 0.5% this week.   

Once again, technology dominated Wall Street headlines and was the main catalyst for major indexes, this time in both directions. Big tech continued to soar early this week, headlined by the race for the world’s largest company between Apple (AAPL), Microsoft (MSFT), and NVIDIA (NVDA). The dead heat just above the $3 trillion mark drew investor attention as the three companies swapped places in the top three. However, following the Juneteenth holiday on Wednesday, tech momentum slowed as investors rotated to other blue-chip stocks. Multiple reasons were cited for the sell-off, including but not limited to corporate buyback blackouts ahead of second-quarter earnings season, overbought conditions, and natural seasonality. The sector has become increasingly expensive but has shown resilience recently in maintaining strong momentum. Second quarter earnings are still a few weeks away, but tech earnings have been strong and estimates are rising, reflecting excellent growth the rest of this year and in 2025.   

European markets began to bounce back following the political turmoil occurring in France, with the STOXX 600 gaining 0.8% this week. The French political landscape and the upcoming election continues to weigh on European sentiment. While sentiment remains fragile, some reports stated the political concerns were overdone as markets began to recover.   

Central bank policy decisions were in focus on Thursday morning and purchasing manager's index (PMI) data on Friday morning. The Swiss National Bank (SNB) cut rates by 0.25% to 1.25% while the Bank of England (BoE) held rates steady. Friday’s PMI data seemed to influence markets, pushing sovereign yields and equities lower. European and Asian markets felt the effects of the technology pullback in the U.S., which spilled over into global markets. Asian indexes ended broadly mixed after facing a rocky week. Hong Kong and Taiwan gained over the last five days, while Japan’s Nikkei and greater China posted weekly declines. India set record highs mid-week and both the Sensex and Nifty 50 delivered weekly gains after a slight drop on Friday.   

Fixed Income: The Bloomberg Aggregate Index finished lower, and yields rose this week as dizzying volatility in bond markets continued. A mixed bag of economic data was released this week – residential home construction took a pause in May and retail sales data was softer than expected, however, Friday’s PMI data came in stronger than expected. Another 20-year Treasury auction was well-received on Tuesday, but economic data continued to hold its ground as the largest factor impacting bond prices and yields.   

In corporate credit, $131.5 billion of new debt was added to the Bloomberg Corporate Index, and $35.6 billion was added to the Bloomberg High Yield Index in May, according to CreditSights research. For U.S. investment grade (IG) bonds, positive rating momentum was seen in both single-A and BBB rating tiers, and in U.S. high yield (HY) rating momentum was negative across both single-B and CCC rating tiers. There has been an increase in HY issuers trading at distressed levels from April, led by the media sector. May saw the U.S. HY issuer-weighted default rate fall by 0.1%, while the debt-weighted default rate remained flat at 1.9%. We remain cautious of corporate credit broadly, mainly due to valuations, but acknowledge that all-in yields remain above long-term averages, which will likely keep demand elevated (and spreads tight).   

Commodities: The Bloomberg Commodity Index could not hold on to gains, paring a weekly advance on Thursday and Friday. Oil continued its rebound on the week after reports showed credit and gasoline stockpiles declined more than expected. In reaction, West Texas Intermediate (WTI) crude futures increased around 2.6% this week. Despite pulling back from highs, gold has shown strength recently, supported by central bank buying and the return of ETF demand. But following Friday’s PMI data, gold declined sharply, ending marginally lower on the week. Platinum gained steadily throughout the week, and copper was slightly lower following Friday’s dip.  

The dollar edged higher against its peers again as concerns linger about the possibility of a major shift in the European political landscape. The yen weakened following the Bank of Japan’s (BOJ) policy decision to leave short term interest rates unchanged and delay cutting government bond purchases. In agricultural commodities, cotton, sugar, and wheat futures declined this week. 

Economic Weekly Roundup

Restaurant spending fell in May. Retail sales rose 0.1% from a month ago after downward revisions to the previous month. The control group within retail sales — which excludes building materials, restaurant spending, autos and gas — fell in aggregate since the beginning of Q2, suggesting downside risk to second quarter consumer spending. (The excluded items are counted in other categories within the BEA’s GDP calculations.) Motor vehicle sales rose as dealers increased incentives to entice consumers. Investors should track the amount of incentives as a percentage of average transaction price, which rose in May. Several categories such as furniture sales and restaurant spending fell for the fourth time in six months as consumers pulled back purchases. 

Consumer spending is cooling in a fairly orderly fashion. So far, the economy could pull off a soft landing, especially if the Fed is quick to adjust policy as conditions change.   

Residential construction takes a pause. Housing starts fell to 1.277 million units annualized in May, the slowest pace since June 2020. The big story is multifamily housing starts are no longer leading the way as they were in the years immediately following the pandemic. A slowdown also occurred in units under construction as well as completions, indicating a slowdown in the residential GDP component for Q2. 

The good news is a slowdown in residential construction should further ease pricing pressures in commodities such as lumber. Softer demand and easing inflation should allow the Fed to start cutting rates later this year.    

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: Bloomberg June U.S. Economic Survey, Dallas Fed Manufacturing Activity (June) 
• Tuesday: Philadelphia Fed Non-manufacturing Activity (June), Chicago Fed National Activity Index (May), FHFA House Price Index (April), CoreLogic US House Price Index (April), CoreLogic 20-city Composite Index (April), Conference Board Consumer Confidence (June), Richmond Fed Manufacturing Index (June), Richmond Fed Business Conditions (June), Dallas Fed Services Activity (June) 
• Wednesday: MBA Mortgage Applications (June 21), New Home Sales (May),  
• Thursday: GDP Price Index (1Q), Wholesale Inventories (May), Personal Consumption (1Q), Core PCE Price Index (1Q), Initial Jobless Claims (June 22), Continuing Claims (June 15), Durable Goods Orders (May), Capital Goods New Orders Nondefense ex Aircraft (May), Capital Goods Shipments Nondefense ex Aircraft (May), Advance Goods Trade Balance (May), Retail Inventories (May), Pending Home Sales (May), Kansas City Fed Manufacturing Activity (June) 
• Friday: Personal Income (May), Personal Spending (May), Real Personal Spending (May), PCE Deflator (May), PCE Core Deflator (May), MNI Chicago PMI (June), University of Michigan Sentiment (June), Kansas City Fed Services Activity (June)