Mid-Week Market Minute 7.10.24

Stocks Continue Climb; CPI Report on Thursday 

Stocks continued to march higher this week as the S&P 500 headed toward its seventh consecutive day of gains on Wednesday. The Financials sector will be in focus over the coming weeks with Bank of America, Citigroup, Goldman Sachs, JPMorgan, and Wells Fargo scheduled to report second-quarter earnings over the next two weeks. According to FactSet, the Financials sector is predicted to report the seventh highest (year-over-year) earnings growth rate of all 11 sectors at 4.3% for the second quarter of 2024. Across the Pacific, Japan’s Nikkei 225 index reached new all-time highs this week, benefitting from ongoing corporate reforms and long-awaited return of inflation to the previously stale economy. 

On the data front, the June Consumer Price Index (CPI) report is scheduled for release on Thursday morning and is expected to show a gain of 0.1% for the month and a 3.1% gain on a year-over-year basis. Core CPI, which excludes food and energy, is expected to post a monthly increase of 0.2% and a year-over-year increase of 3.4%. 

This week’s key inflation data comes after Fed Chair Jerome Powell’s two-day speech this week on Capitol Hill, where he delivered his semiannual monetary policy report to Congress. In the remarks, Powell noted the economy and labor market remain strong, despite some recent cooling. Notably for investors, Powell appeared to shift more focus to the employment side of the Fed’s dual mandate, noting “reducing policy restraint too late or too little could unduly weaken economic activity and employment.” In response, futures markets now are pricing in an 80% probability of a 25-basis-point rate cut at the Fed’s September meeting, followed by an additional cut in December. 

Source: GSAM, CNBC, JPMorgan, FactSet 

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