| After experiencing declines in 6 of the last 7 trading days, the S&P 500 and Nasdaq managed to rebound on Friday, closing the week positively and reducing their weekly losses. The Dow Jones Industrial Average surged over 1.5% or 600 points, ending above 40,500 for the fourth consecutive weekly gain, driven by a 22% rise in Dow component MMM, marking its best day since 1987 following strong earnings results and guidance. However, the standout performer this week and month has been the Russell 2000 Index, which climbed another 1.6% today, finishing the week up approximately 3.5% (in contrast to the Nasdaq’s 2% decline) and has now increased over 10% in July. This surge is fueled by anticipation of interest rate cuts by the Fed in September due to slowing inflation. Speaking of inflation, today’s data did not present any surprises or significant changes, maintaining hopes for rate cuts as the PCE price index for June showed a 2.5% year-over-year increase, with May’s figure revised higher; the core PCE, the Fed’s preferred inflation measure, rose 2.6% year-over-year, consistent with May’s upward revision. With today’s gains, the S&P 500 (SPX) climbed back above its 50-day moving average of 5,435, while the Nasdaq Composite remained below its 50-day moving average of 17,540. A notable round of buying in the last few days was highlighted by @KobeissiLetter, who noted, The S&P 500 has added $850 billion in market cap over the last 24 hours as dip buyers stepped in. This follows the Magnificent 7 posting its largest 10-day drawdown in history, losing $1.75 trillion in market cap. In percentage terms, the Magnificent 7 experienced its biggest daily loss since October 2022 on Wednesday.” Several major companies reported earnings this week, with more significant reports expected next week from Apple, Microsoft, and Amazon. For the week, the S&P 500 fell 0.83%, the Nasdaq declined 2.08%, the Dow rose 0.75%, and the Russell 2000 increased by 3.46%. |
