The US stock market closed out a positive week on an uneven note on Friday, June 21st, 2024. While the majority of stocks advanced, key indexes delivered modest results. 

Market Performance 

• Dow Jones Industrial Average: Defied the trend, edging up by 0.1% (15.57 points) to close at 39,150.33, marking its third consecutive day of gains. 

• S&P 500: Dipped slightly by 0.2% (8.55 points), ending the day at 5,464.62 after two days of wins. 

• Nasdaq Composite: Shed 0.2% (32.23 points), closing at 17,689.36, snapping its seven-day winning streak. 

Sector Analysis 

The semiconductor sector, particularly Nvidia (NVDA), was the main culprit for the drag on the S&P 500 and Nasdaq. After briefly holding the title of the world’s most valuable company, Nvidia’s stock continued its decline for a second day, falling over 3%. This weakness rippled through the tech sector. 

Weekly Performance 

Despite the downbeat performance of major indexes,  the overall week was positive:  

• Dow: Gained 1.5% 

• S&P 500: Advanced 0.6% 

• Nasdaq: Saw a marginal increase of 0.48% 

Friday’s Closing Levels: 

Federal Reserve Watch 

The Federal Reserve is closely monitoring inflation numbers, and upcoming reports are expected to show the slowest price increases in months. This could be a key factor in the Fed deciding to lower interest rates as early as September. Economists predict minimal inflation growth, especially for core items excluding food and energy. 

Job Market and Consumer Spending 

There’s good news on another front of the Fed’s focus: the job market. While it might be growing a bit slower, it’s still healthy. This strength gives the Fed some breathing room when it comes to potentially lowering rates. 

Beyond inflation, data on consumer spending will shed light on how much people are buying services compared to recent trends in merchandise purchases. Economists forecast a slight increase in spending and income. 

In addition to these reports, updates on consumer confidence, housing market activity, and economic growth figures are expected. 

Market Outlook 

We shouldn’t let the last hour of trading affect us too much as it was due to options expiry, mostly on Nvidia, second only to the S&P index.  

It feels like the market is taking a breather before deciding its next move, which should be higher. However, if investors decide to take profits, we could see markets drift lower in the next few days, especially if there is rebalancing for month and quarter-end. 

Source: CBOE, Bloomberg 

This commentary is written by James Gomes, a seasoned finance industry veteran with extensive experience of over 30 years, including a substantial tenure at a reputable U.S. bank exceeding 20 years.