Last Week in the Markets: June 10th – 14th, 2024

What happened last week?

Since March 24th, the S&P 500 has risen 2.4%, NASDAQ has jumped 6%, while the Dow’s 30 large corporates have fallen 3.5%.  Last week’s path for equities mirrored that past month, and these results relied on two important announcements that arrived on Wednesday.

At 8:30 am Eastern time the U.S. Bureau of Labour Statistics reported that the Consumer Price Index (CPI) was unchanged for the month of May after rising 0.3% in April.  Over the past 12 months, the all-items index increased 3.3 percent.  Core CPI, which excludes food and energy, rose 3.4 percent on a year-over-year basis.  Both figures were lower than expectations.  CNBC and CPI   BLS press release

At 2 pm, the Federal Reserve delivered its interest rate announcement that maintained the federal fuds rate at a range of 5¼ to 5½ percent.  According to the press release, “Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective.”  The underlying indicators for economic activity, jobs and inflation made the decision to hold interest rates steady the expected result.  CNBC and Fed rates

The rate announcement was accompanied by the Fed’s Summary of Economic Projections (SEP), which provides more insight into the direction of interest rates.  The “dot plot” representing committee member’s predictions to the end of 2026 shows a ¼ point cut in 2024, four cuts totaling 1% in 2025, and another 1% in 2026.  Lower rates from the Fed, or at least the possibility of lower rates, propelled equities upward in the U.S. last week.

What’s ahead for this week and beyond?

In the U.S., a number of indicators are scheduled for release including building permits, housing starts, existing home sales, retail sales, capacity utilization, industrial production, manufacturing production, business inventories, retail inventories.  The Federal Reserve will release its monetary policy report.  American markets will be closed on Wednesday for Juneteenth observances.

In Canada, housing starts, new housing price index, retail sales, and the summary of the latest Bank of Canada deliberations that saw a 25 basis point reduction to its policy interest rate will be announced.

Globally, China’s house prices, industrial production, employment and retail sales, Eurozone’s construction output, wages, consumer confidence, CPI and Harmonized Index of Consumer Prices (HICP), Japan’s CPI, imports, exports and trade balance, U.K.’s retail sales, CPI and PPI will be reported.