The Week That Was, The Week Ahead: Macro & Markets, June 23, 2024

Everything to Know about Macro and Markets

Last week was short and turbulent, though stocks mostly ended higher than they began. At the beginning of the week, the S&P 500 (SPX), Nasdaq Composite (NDAQ), and Nasdaq-100 (NDX) posted new record highs as a surge in NVIDIA (NVDA) propelled a rally in tech stocks. The melt-up in the shares of the AI poster child even briefly propelled NVIDIA’s market capitalization above that of Microsoft (MSFT), making it the most valuable company in the world.

Has the Tech-Led Rally Further to Run?

As investors returned to the markets following the Juneteenth holiday on Wednesday, the three major indexes stumbled in the last two sessions. Tech momentum reversed due to the heavy profit-taking and the corporate buyback blackouts ahead of the second-quarter earnings season. In addition, Friday marked the so-called “triple-witching” event, which usually boosts volatility significantly, with approximately $5.5 trillion of stock options, stock index futures, and stock index options expiring simultaneously.

Despite two-day declines, the S&P 500 and the Nasdaq-100 ended the week firmly in the green, while the Nasdaq Composite was flat. In contrast, the Dow Jones Industrial Average (DJIA) rose, locking in a strong weekly gain. However, with the U.S. stocks crossing the 20-month anniversary of the bull market last week, many market participants are questioning its viability amid a slowing economy and rich stock valuations.

Economic Data a Mixed Bag

Recent economic data has been a mixed bag, muddying the interest-rate outlook. The preliminary June S&P Global Services PMI data reflected the fastest pace of business activity growth since early 2022. The S&P Manufacturing PMI also registered a notable increase from May, along with strong industrial production numbers signaling continued economic robustness. The Atlanta Fed’s latest estimate for Q2 GDP growth came in at 3%, a significant acceleration from Q1’s 1.3%.

In contrasting, the Conference Board’s Leading Economic Index fell by more than expected last month, indicating further economic slowdown ahead. The CB now expects the U.S. GDP to fall below annualized 1% growth in the second and third quarters “as elevated inflation and high interest rates continue to weigh on consumer spending.” Consumer financial health has been showing some cracks lately, including increased delinquencies on consumer loans and weaker-than-expected retail sales.

This week will be data-heavy, with several prints expected to shed some light on the state of the economy and its short-term outlook. Thus, investors are looking ahead to the Federal Reserve’s preferred inflation gauge – the PCE report – along with consumer sentiment, inflation expectations, and other notable reports.    

Stocks That Made the News

¤ NVIDIA (NVDA) saw its shares decline strongly on Thursday and Friday, casting a shadow over the technology sector stocks and pulling down most of the chipmakers. NVIDIA’s weight has reached about 7% of the total S&P 500 market cap, which leads to an outsized impact of the stock’s movements on the whole market.

¤ Super Micro Computer (SMCI) and Dell Technologies (DELL) were the best performers in the tech hardware sphere, despite giving back some of their gains from early in the week. The tech champions surged on the news they will be building server infrastructure to power an “AI factory” for Elon Musk’s artificial intelligence startup xAI.

¤ Accenture (ACN) was the strongest performer in the IT services space, with the stock jumping over 9% on the week despite missing estimates and lowering fiscal year guidance, as investors cheered a significant increase in the company’s AI-related bookings.

¤ Gilead Sciences (GILD) led the weekly gains for Healthcare stocks, as it reported that its investigational drug had shown 100% effectiveness in preventing HIV.     

¤ Chewy Inc. (CHWY) continued its climb higher, adding over 10% during the past week due to an apparent short squeeze. The short-sellers started covering their negative bets after the online pet care retailer reported its second straight quarter of positive net earnings.  

Upcoming Earnings and Dividend Announcements

The Q1 2024 earnings season has ended, but some earnings releases are still scheduled for this week, mostly from firms whose fiscal year differs from the calendar year.

This week, investors will follow the reports scheduled to be published by Carnival (CCL), FedEx (FDX), TD SYNNEX (SNX), Micron (MU), General Mills (GIS), and Paychex (PAYX).

Ex-dividend dates are coming this week for Broadcom (AVGO), FedEx (FDX), STMicroelectronics (STM), Sempra Energy (SRE), Medtronic (MDT), Deere (DE), Stryker (SYK), and other dividend-paying firms.  

For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.