Mid-Week Market Minute 7.24.24

Stocks Mixed; PCE Release on Friday

Global stocks were mixed in early trading this week as investors digested second-quarter earnings results ahead of key economic data later this week. Underwhelming results from both Alphabet (Google’s parent company) and Tesla weighed on sentiment Wednesday, leaving the S&P 500 flat as of mid-week. Shares of Alphabet fell approximately 4% on Wednesday, while shares of Tesla were lower by more than 8%. Separately, the recent outperformance of small-cap stocks relative to large-cap stocks continued into this week, as the Russell 2000 index was higher by about 2% mid-week. With U.S. equity valuations well above average, strong earnings will be crucial for continued momentum in stocks in the second half of 2024. In the early innings of earnings season, about 20% of S&P 500 companies having reported results and earnings are on pace to grow by about 10% on a year-over-year basis. 

Outside of earnings, the bond markets remain focused on key economic data ahead of the Federal Reserve’s next policy-setting meeting on July 31. We don’t anticipate the Fed to enact any policy changes at the July meeting, but we do expect they could hint toward a 25-basis-point rate cut at the September meeting. For the rest of this week, will get a look at the advance estimate of second-quarter gross domestic product (GDP) growth on Thursday, which is expected to come in around 2%. On the inflation front, Friday will bring Personal Consumption Expenditures (PCE) data for June. This is the Fed’s preferred measure of inflation, and an important metric to monitor on the continued path of disinflation. Both headline and core PCE are expected to fall to approximately 2.5% in June, down from 2.6% in May. 

Source: GSAM, CNBC, JPMorgan, FactSet

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