Stock Market
Friday, June 28th, the last trading day of the month, marked the midway point of 2024 for the U.S. stock market. In the first half of the year, stocks flourished, touching all-time highs.
For the first six months of 2024, the stock market’s three major indices performed as follows:
Nasdaq +18.1%
S&P 500 + 14.5%
The Dow +3.8%
And to recap June, the stock market’s three major indices performed as follows:
Nasdaq: +6%
S&P 500 +3.5%
The Dow +1.1%
It was the seventh positive month out of eight for all three indices.
Inflation
The Fed may have received the inflation news they were looking for with the latest Consumer Price Index report, revealing that headline CPI didn’t increase at all in May after rising 0.3% in April.
On an annual basis, inflation rose 3.3% in May after April’s 3.4% rise in prices, the smallest increase in three years.
For the month, gasoline prices dropped 3.6%, offsetting shelter costs that rose 0.4%, increasing for the fourth consecutive month. The energy index fell while food was slightly more expensive.
Stripping away volatile food and energy prices, all-items inflation rose just 0.2% in May after a 0.3% increase in April.
By the end of the month, the core personal consumption expenditures price index (PCE) was up just 2.6% from one year prior, the lowest annual rate for the Fed’s preferred measure of inflation in more than three years.
The Fed and Rates
At its June 12th meeting, the Federal Reserve opted to keep its benchmark interest rate unchanged, largely as expected. Most importantly, the central bank noted that we’ll likely see one rate cut in the remainder of the year, not two as originally predicted (or three rate cut projections as recently as March).
With sticky inflation still their chief concern, the Federal Open Market Committee members are carefully measuring progress, bringing down price increases towards their 2% inflation objective.
“Inflation has eased over the past year but remains elevated,” according to FOMC statements. “In recent months, there has been modest further progress toward the Committee’s two percent inflation objective.”
Encouraged by the news, Wall Street shot to a record high after the FOMC statement. Likewise, analysts are optimistic about aggressive rate cuts in 2025, with up to four reductions totaling a full percentage point drop on the table. If that holds true, along with 2024’s one rate cut, the federal funds rate would be at 4.1% by the end of 2025.
Jobs & Unemployment
Total nonfarm payrolls increased by 272,000 in May, sharply outpacing expectations and blowing by April’s increase of 165,000 new jobs. April’s accelerating job market also surpassed the 12-month average of 232,000 new hires, but unemployment rose to 4% for the month, the highest mark since May of 2022. In May, job gains were led by the sectors of health care (+68,000), government (+43,000), and leisure and hospitality.
GDP
Based on newly released third estimates, real gross domestic product (GDP) rose at an annual rate of 1.4% in the first quarter of 2024. The Bureau of Economic Analysis also updated their Q4 GDP estimate to 3.4%.
Both of those numbers represent a 0.1% increase over earlier estimates, based on clarification of imports, government spending, and nonresidential fixed investments, as well as increases in consumer spending.
Investing in the commercial space industry
The commercial space industry is transforming rapidly, with its advancements impacting billions of people every day. There are currently seven billion satellite-enabled smartphones in use worldwide, and space data plays a crucial role in numerous aspects of our lives.
What was once the exclusive realm of scientists and astronauts has now opened up interesting investment opportunities. The market has grown from $280 billion in 2010 to an impressive $447 billion today, with projections indicating it could reach $1 trillion by 2030. The number of active satellites is expected to potentially triple in the next decade, highlighting the sector’s significant growth potential.
Investment opportunities are now extending beyond government space agencies, with private enterprises making substantial advancements in human space exploration and various other space-related fields.
Housing and Mortgage
Mortgage rates enjoyed a respite in June, approaching and even falling below the 7% mark towards month’s end. Rates for home loans have proven volatile all year long thanks to anticipation of Fed rate cuts and inflation worries, as mortgages are heavily influenced by investor appetite for 10-year Treasury bonds, a strong indicator of fixed mortgage prices.
Despite elevated rates, home prices continue to climb, actually reaching all-time highs in June. After 11 straight months of price gains, the National Association of Realtors reports that the median sale price for a previously owned home is now $419,300, a record high.
Notable Quote
“The function of economic forecasting is to make astrology look respectable.”
– John Kenneth Galbraith