Monthly Market Insights | June 2024

U.S. Markets

Stocks rose in May as investors cheered upbeat Q1 corporate reports and signs that the economy was still strong while not overheating.

The Dow Jones Industrial Average gained 2.30 percent, while the S&P 500 Index added 4.80 percent. The tech-heavy Nasdaq composite picked up 6.88 percent.1

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Q1 Corporate Reports

May wrapped up the Q1 company report season. The S&P 500 is on track to post a 5.9 percent growth rate for the quarter, which will be the highest year-over-year earnings growth rate since Q1 2022.2

Mid-month, mega-cap tech names rallied in anticipation of the Q1 corporate report from Nvidia, which makes semiconductors for artificial intelligence and is one of the largest stocks in the S&P 500 by market capitalization. Nvidia’s upbeat report helped lift the Nasdaq to a fresh record.3

Nvidia’s corporate report should not be considered a solicitation for the purchase or sale of the company’s stock.

Investors See Goldilocks

Gains over the month were also driven by a delicate balance of “Goldilocks” economic data that were not too cold and not too hot. For example, 175,000 jobs were created, which was a solid number but less than the 240,000 jobs that economists had expected.4

In addition, a cooler-than-expected Consumer Price Index (CPI) report released mid-month sparked a broad-based rally as the news raised investors’ hopes that the Fed might adjust interest rates at some point this year. The news helped push the Dow above 40,000 for the first time.5

Sector Scorecard

Ten out of the 11 S&P 500 sectors ended in the green, led by Utilities (+8.98 percent), Technology (+7.08 percent), and Communication Services (+6.94 percent). Real Estate (+5.11 percent), Materials (+3.28 percent), and Financials (+3.25 percent) also posted solid gains. Consumer Staples (+2.45 percent), Health Care (+2.40 percent), and Industrials (+1.68 percent) and Consumer Discretionary (+0.20 percent) rounded out the winners. Energy (-0.32 percent) ended the month lower.6

What Investors May Be Talking About in June

In the month ahead, attention is expected to shift to Apple for its annual Worldwide Developers Conference, scheduled for June 10 through 14.7

Apple is expected to release its latest iPhone software and preview what is coming for the second half of the year. Apple will tease new features of upcoming software releases, and investors are expecting to gain insight into Apple’s artificial intelligence strategy.7

Apple’s corporate event should not be considered a solicitation for the purchase or sale of the company’s stock.

While AI mentions from S&P 500 companies have steadily increased, Apple has not provided many updates on its AI strategy. Some anticipate that Apple will give more details about its approach at the conference.8

World Markets

The MSCI–EAFE Index gained 3.29 percent in May as markets rallied globally.9

European stocks performed well, with Germany picking up 3.16 percent and the United Kingdom tacking on 1.61 percent. Spain led, gaining 4.31 percent, while France was flat (+0.10 percent).10

Pacific Rim markets were mixed. Australia rose 0.49 percent, and China’s Hang Seng Index rose 1.78 percent. However, Korea was down 2.06 percent, and Japan’s Nikkei was flat (+0.21 percent).11

Indicators

Gross Domestic Product (GDP)

The second estimate of economic growth in the first quarter was revised downward, from 1.6 percent to 1.3 percent.12

Employment

Employers added 175,000 jobs in April compared with the 303,000 jobs created in March and less than the 240,000 expected. The unemployment rate ticked up to 3.9 percent, while average hourly earnings increased 3.9 percent year over year in April. Both unemployment and wage growth were less than expected.13

Retail Sales

Retail sales remained unchanged in April, following a revised increase of 0.6 in March. The April figure was below expectations.14

Industrial Production

Industrial output fell 0.3 percent in April, driven by declines in durable consumer goods (cars and car parts) and electrical equipment and appliances. The April number missed expectations.15

Housing

Housing starts rose by 5.7 percent in April, as builders anticipated pent-up demand from buyers on the sidelines.16

April existing-home sales dropped 1.9 percent from March 2024 as demand exceeded available inventory. April sales were down 1.9 percent from a year earlier. The median sales price was up 5.7 percent from a year earlier to $407,600.17

New home sales fell 4.7 percent to a seasonally adjusted rate of $634,000, as higher mortgage rates appeared to take a toll on demand.18

Consumer Price Index (CPI)

Consumer prices rose 0.3 percent in April over the previous month and 3.4 percent compared with a year prior, both in line with expectations. Core inflation (CPI minus volatile food and energy prices) rose 0.29 percent for April and 3.6 percent year over year—the lowest increase in three years and just below expectations. It was the first time in three months that core CPI was lower than forecast.19

Durable Goods Orders

Orders of manufactured goods designed to last three years or longer rose 0.7 percent in April compared with a 0.8 percent increase in March. The April increase exceeded expectations.20

The Fed

Minutes from the April/May Federal Open Market Committee meeting, released on May 22, stated that some Fed officials worried about the lack of progress on inflation. At that meeting, the Federal Open Market Committee (FOMC) kept the Fed funds rate steady at the 5.25–5.50 percent target range.21

The next two-day FOMC meeting concludes on June 12.

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