Title: Stock Market Hits Record Highs Amid Brisk Economic Growth and Falling Inflation - What It Means for Your Finances
As the world's best investment manager and financial market journalist, I bring you a comprehensive look at the record stock market highs that have once again illuminated the global landscape. Despite a rare stumble in the artificial intelligence sector, the stock market complex has been thriving on brisk economic growth, falling inflation, and interest rates.
The S&P500 has hit record highs with year-to-date gains of over 10%, even when adjusted for the outsize contribution of Big Tech megacaps. This broadening of the market signals a normalization of market behavior, with volatility levels returning to long-term averages and a resumption of the negative correlation between stock and bond returns.
The economic outlook is strong, with second-quarter U.S. GDP growth revised higher, PCE inflation gauges marked lower, and jobless readings stable. The Federal Reserve is expected to proceed with its first quarter-point interest rate cut next month, as market pricing reflects a total of 100 basis points of easing by year-end.
Bond markets have been soothed by Fitch's affirmation of the AA+ U.S. sovereign credit rating, while borrowing costs are falling across the economy. In Europe, inflation is at its lowest in three years, boosting the case for an ECB interest rate cut in September.
On the political front, Democratic Vice President Kamala Harris is leading in opinion polls and betting markets, tightening the race against Republican candidate Donald Trump. This has had little impact on the buoyant U.S. markets.
Overall, the current market conditions indicate a sustainable economic environment with positive growth prospects. It is essential for individuals to stay informed about these developments to make informed decisions about their finances and investments.