Softer economic data leads markets to record closing highs

Good Afternoon. All three major indexes recorded positive returns for the week. The S&P 500 advanced 2%, the Nasdaq gained 3.5%, while Dow added 0.6%. S&P 500 and Nasdaq both posted record closes on Friday. Read more

This week, markets exhibited positive sentiments thanks to a few positive catalysts. In his speech on 2/7, the Fed chair, Jarome Powel, expressed satisfaction with the progress made on inflation over the past year. In addition, the numbers reported later in the week for unemployment claims (238k vs. 234k) and the unemployment rate (4.1% vs 4%) were slightly higher than the forecast, which may lead the Fed to consider cutting rates.

CNN's Fear & Greed Index increased by 13 points this week and now stands at 54 (Neutral) out of 100. Details here

The top five trending stocks on Reddit are Nvidia, SPY, Tesla, JP Morgan, and VOO. The full list is here.

The U.S. labor market added 206,000 nonfarm payroll jobs in June, surpassing economists' expectations of 190,000. Despite the job growth, the unemployment rate unexpectedly increased to 4.1% from 4% in the previous month. This jobs report comes amid a week where the stock market reached record highs, even as softer economic data hinted at potential disinflation. Read more

Fed Chair Powell, in his speech on 7/2, acknowledged progress on inflation but stated more confidence is needed before rate cuts. He emphasized the importance of sustained inflation reduction towards the 2% target. Read more

The Fed meeting minutes released on 7/3 also showed that policymakers lacked the confidence needed to lower policy, while they generally agreed there should be no rush to cut. The FOMC “dot plot” showed one quarter percentage point cut by the end of 2024, down from the three indicated following the last update in March. Even though the dot plot indicated one cut this year, futures markets continue to price in two, starting in September. Read more

Tesla's stock has erased its 2023 losses with a 27% rally this week, driven by better-than-expected second-quarter vehicle delivery numbers and successful sales strategies. Read more

Constellation Brands reported a 5.8% increase in revenue to $2.66 billion for the first quarter of 2025, with net income rising significantly to $877 million and EPS reaching $4.80, surpassing analysts' expectations. The company's profit margin improved substantially to 33%, up from 5.4% in the same period last year, driven by reduced costs. Read more

Microsoft and Nvidia have surged ahead in the tech industry due to their successful AI strategies, briefly surpassing Apple in market value and highlighting the growing importance of AI in the sector. While there's significant excitement around AI's potential, recent market trends suggest increased awareness of current generative AI products not exactly living up to their own hype, and investors need to be picky. Read more

Despite fears, higher interest rates haven't stopped stock growth. Historically, stocks have often risen alongside rates, contradicting the belief that high rates are detrimental. The key reason is that stock movements are driven by surprises rather than rate levels alone. Read more

The article from Sequoia Capital discusses the significant growth and future challenges of AI, highlighting Nvidia's recent ascent as the world's most valuable company. Despite improvements in GPU supply and investments, a $600 billion gap remains in AI revenue expectations. Read more

The article from Man Institute explains that despite the political focus on upcoming elections in the UK, France, and the US, corporate earnings will be the primary driver of market behavior in the near term. Read more

The EY Global IPO Trends report for Q2 2024 shows a 12% decline in global IPO volumes and a 16% drop in proceeds year-over-year, primarily due to a slowdown in Asia-Pacific. Conversely, the Americas and EMEIA regions experienced robust growth. The industrial sector led in the number of IPOs, while technology raised the most capital. Read more