✅ Written by Austin DeNoce, Markets Reporter, Walk-On Holdings

✅ Edited by Casimir Stone, Creative Director Walk-On Holdings

This Week in US Markets: Stocks Hit New Highs Amid Cooling Inflation

It was a record week for the U.S. market. The S&P 500 managed four straight record closes before ticking fractionally lower on Friday. Meanwhile, the Nasdaq Composite stuck the landing and closed the week with five consecutive record closes, on the back of positive inflation data.

The Consumer Price Index (CPI) for May came in cooler than expected, with headline prices increasing 3.3% annually and core CPI prices rising 3.4% annually. Shelter prices still accelerated, adding 0.4% from April, but the news overall was positive, building investor confidence that rate cuts could come sooner than later. 

Hours after the CPI release, the Federal Reserve elected to keep rates unchanged for the seventh straight meeting. It also released its quarterly economic forecast, which showed just one interest rate cut in 2024, down from 3 in previous projections.

Meanwhile, the median projection for inflation at year-end increased 0.2 percentage points to 2.6%, and the neutral rate was raised to 2.8%. In his speech shortly after the news release, Fed Chair Jerome Powell acknowledged the progress made on inflation but emphasized that more positive data was needed to feel comfortable cutting interest rates. 

The next day, we saw just that. The Producer Price Index (PPI), a measure of wholesale inflation, showed prices in May actually fell 0.2%, building on earlier confidence that overall inflation is headed lower.

In other economic news for the week, the NFIB small business optimism index notched its highest reading of the year. However, the uncertainty index also registered its highest reading since 2020, largely due to inflation, which was still cited as business owners’ biggest concern. The University of Michigan’s consumer sentiment index fell to its lowest level since November 2023, a move partly driven by growing concerns around inflation and declining incomes. On the employment front, initial claims from last week jumped more than expected, hitting their highest level since August 2023. Finally, mortgage application volume last week jumped roughly 16% as the 30-year mortgage rate fell to 7.02%.

In company news, shares of CrowdStrike, GoDaddy, and KKR & Co. rose after the S&P Dow Jones Indices announced that all three would be added to the S&P 500 on June 24th. The companies will replace Robert Half, Comerica, and Illumina. Meanwhile, Nasdaq announced that British chipmaker Arm will join the Nasdaq 100 index on June 24th.

In tech, Apple held its Worldwide Developer’s Conference Monday, where it unveiled Apple Intelligence, its official entry into the AI race, which included a partnership with OpenAI. On Tuesday, Apple added to its momentum by announcing it would embed Affirm’s buy now, pay later (BNPL) loans into Apple Pay later in the year, which brought the tech giant’s shares to a record high, and gave a significant boost to Affirm’s stock as well. Oracle also announced a new cloud deal with OpenAI the following day, as well as one with Google-parent Alphabet. 

In the auto industry, General Motors authorized a $6 billion share buyback program and 33% increase to its quarterly dividend. Meanwhile, Tesla’s stock rallied on news from Cathie Wood’s ARK Invest, which predicted Tesla’s shares will reach a value of $2,600 in 2029 as it transitions into a robotaxi company. Tesla continued its rally later in the week, after shareholders voted to reinstate CEO Elon Musk’s multi-billion-dollar pay package. However, the decision must still be decided in court. 

Elsewhere, shares of chipmaker Broadcom jumped double digits after the company reported better-than-expected earnings results, raised its revenue forecast for 2024, and announced a 10-for-1 stock split on July 15th. Shares of GameStop jumped after a large increase in $20 call option volume, the same calls held by trader Roaring Kitty, which drove speculation that he may have exercised some of his calls to add four million more shares to his position. Adobe’s stock soared after beating first-quarter earnings and revenue estimates. Finally, cruise operators fell on pricing power concerns after a decline in early June cruise prices.