S&P 500 Ends Strong First Half Despite Friday Dip

S&P 500 Closes Lower, Ending Strong First Half of 2024

At 5,460.48, the S&P 500 ended Friday down 0.41%. Though the index fell, it had a great first half of 2024, rising 14.5%. Investors were pleased to see slowing inflation in the economic data released on Friday. Before retreating, the index had earlier in the session hit a new intraday high. Equally falling, the Nasdaq Composite closed at 17,732.60, down 0.71%. Settling at 39,118.86, the Dow Jones Industrial Average fell 0.12%. Traders are absorbing this information as they get ready for the second half of the year.

Inflation Slows to the Lowest Annual Rate in Over Three Years

May saw the slowest annual rate of inflation in over three years. Just 0.1% increased in the core price index for personal consumption expenditures last month, according to the Commerce Department. Expectedly, the core PCE index rose by 2.6% year over year. The erratic prices of food and energy are not included in this index. Comprising these prices, the headline PCE increased 2.6% year over year and remained flat for the month. Matching the Dow Jones consensus estimates were these numbers. This information matters because the Federal Reserve prefers to measure inflation using the core PCE.

Nasdaq and S&P 500 Hit New All-Time Intraday Highs

Friday's intraday highs for the S&P 500 and the Nasdaq Composite were both historic. Both indexes fell back by the end of trading despite these highs. The S&P 500 closed 0.41% lower, and the Nasdaq ended down 0.71%. Not insignificantly, the Dow Jones Industrial Average dropped 0.12%. Trades absorbed economic data, indicating declining inflation as these swings occurred. Remarkably high consumer sentiment numbers also had an impact. These elements added to a choppy trading day.

Consumer Sentiment Surpasses Expectations in June

Expectations were exceeded by the June consumer sentiment index from the University of Michigan. The preliminary reading of 65.6 was replaced by 68.2. This development suggests rising customer confidence. In May, the one-year inflation forecast was 3.3%; now it is only 3%. The traders welcomed these encouraging numbers. A better consumer attitude can increase economic activity. This information helped Friday's overall performance in the market.

Federal Reserve Rate Cut Speculations Rise for September

The next action of the Federal Reserve with relation to interest rates is being speculated about by traders. There's a 64.1% chance the central bank will cut rates at its September meeting, according to the CME Group FedWatch Tool. The most current inflation figures, which indicated a slowdown, are what spurred the conjecture. Just 0.1% increase was recorded in May in the core price index for personal consumption expenditures. It rose 2.6% yearly. This information confirms predictions and points to a slowdown in inflation. Lower rates might help the market rise even more.

AI Trade Drives Significant Gains in the First Half of 2024

Early in 2024, the artificial intelligence industry greatly improved market performance. Rising 18.1%, the technology-heavy Nasdaq was in the lead. Not insignificantly, the S&P 500 increased 14.5%. AI technology promises have investors giddy. This excitement has propelled related stock investments. The leading participant in the AI market, Nvidia, saw a 0.4% decline in its shares on Friday. All things considered, this year, the AI theme has ruled the market.

Technology Sector Leads Market Gains with AI Craze

One of the main forces behind the market increase in 2024 has been the technology industry. Heavy on tech stocks, the Nasdaq Composite increased 18.1% in the first half of the year. Investors are especially enthusiastic about artificial intelligence. This zeal has encouraged large investments in technology stocks. Gaining 14.5% over the same time frame, the S&P 500 also benefited. In the meantime, the Dow Jones Industrial Average gained only 3.8%. The emphasis on AI has produced a narrowly focused market trend.

Dow Jones Underperforms Despite market resilience

By 2024, the Dow Jones Industrial Average will have trailed behind other significant indices. Though the market was generally resilient, the Dow only increased 3.8% in the first half of the year. Part of the reason for this underperformance is a second-quarter retreat. Over this time, the Dow fell 1.7%. By contrast, the Nasdaq and S&P 500 increased 8.3% and 3.9%, respectively. The performance of the Dow emphasizes how uneven market gains are. Investor attention is shifting to stocks in technology and artificial intelligence.

Market Overview: June marks the seventh positive month in eight

For the main indices, June was the seventh positive month in eight. Leading with a nearly 6% increase month to date is the Nasdaq. 3.5% was added to the S&P 500 and 1.1% to the Dow. This tendency demonstrates how resilient the market is. Concerning the economy and the possibility of rate reductions, investors are upbeat. Gains have also been primarily driven by the AI trade. The June performance of the market completed a solid first half of the year.

Key Factors That Could Influence Market Volatility in the Second Half of 2024

In the second half of 2024, market volatility may be influenced by a number of factors. One important factor is when possible rate reductions by the Federal Reserve might occur. Additionally, traders are on the lookout for indications of declining consumer demand. Additionally affecting the market could be political developments like the impending election. Some analysts caution about possible investor complacency despite recent gains. Aptus Capital Advisors' John Luke Tyner says more participation is required for higher highs. These elements might cause the market to be more volatile in the next few months. Investors ought to be alert and ready for any changes in the market.

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