The stock market soared to new heights on Friday, reaching a record close as the latest jobs report fueled hopes for Federal Reserve rate cuts.
The benchmark market index surged by 0.54%, closing at 5,567.19, while the Dow Jones Industrial Average climbed 0.90% to end at 18,352.76. Both indexes hit all-time highs during the session, with the S&P 500 marking its 34th record close of 2024. The Nasdaq added 0.17%, or 67.87 points, closing at 39,375.87.
Labor data released on Friday morning showed a 206,000 increase in nonfarm payrolls for June, pushing the unemployment rate up to 4.1%, slightly higher than economists' predictions of 4%.
All three major indexes ended the week positively, with the Nasdaq Composite rising 3.5%, the S&P 500 climbing nearly 2%, and the Dow adding close to 0.7%.
The S&P 500’s rally this year has reached 16.7%, with investors expecting a rate cut from the Federal Reserve later in the year to combat any economic downturn.
Key events to watch this week include Powell’s testimony before the Senate and House, the NATO summit in Washington, China's CPI/PPI data, and the US CPI and PPI releases.
Q2 earnings season kicks off this week, with UBS strategists expecting S&P 500 EPS to grow by 7.4%. The Big 6 TECH+ companies are projected to grow 31.8% in 2Q.
Analysts' Insights on US Stocks
BTIG: Describes the current market as unprecedented, with extreme levels of optimism and low volatility. Market seems to be more concerned with slowing growth than rate cuts.
Bank of America: S&P 500 approaching new highs, with potential upside to 6150. Other indexes need to confirm new highs for a healthy summer rally.
Evercore: Despite high valuations, opportunities to generate Alpha in 2Q24 reporting season. Forecasting 11.5% YoY EPS growth for S&P 500.
Oppenheimer: Raises year-end S&P 500 price target to 5,900, citing strong performance in Communication Services, Healthcare, and Information Technology sectors.
Analysis
The stock market reached record highs on Friday, driven by optimism surrounding Federal Reserve rate cuts and positive job data. Investors are anticipating a rate cut later in the year to counter any economic slowdown. The upcoming Q2 earnings season is expected to show growth in S&P 500 EPS, with the TECH+ companies leading the way.
Analysts have differing views on the market, with some highlighting unprecedented levels of optimism and low volatility, while others project further upside potential for the S&P 500. Despite high valuations, opportunities for generating Alpha are expected in the 2Q24 reporting season.
Overall, the stock market outlook remains positive, with strong performance in key sectors and potential for further growth in EPS. Investors should keep an eye on upcoming economic data releases and earnings reports to make informed decisions about their investments.
Unveiling the S&P 500 Earnings Results: A Deep Dive into Q3 '23, Q4 '23, and Q1 '24 Reports
As the world's best investment manager and financial market's journalist, I bring you the latest insights on the S&P 500 earnings results over the most recent three quarterly reporting seasons. Our bullish outlook for stocks is underpinned by the resilience showcased in these reports, fueled by the Fed's mandate-sensitive monetary policy.
JPMorgan's perspective sheds light on the prevailing consensus in the market. The focus in the first half of the year has been on buying Cyclical sectors due to the PMI rebound and favoring consumer exposure amidst an improvement in real disposable incomes. While European consumers are expected to fare better this year, we advocate for a barbell strategy of Defensives and Mining. Our preference for Growth over Value remains unchanged, aligning with our strategy from the previous year.
In conclusion, analyzing these earnings results and market trends can provide valuable insights for investors. By understanding the impact of economic data and monetary policies on stock performance, individuals can make informed decisions to optimize their financial portfolios. Stay tuned for more updates and expert analysis to navigate the ever-changing landscape of the financial markets.