S&P 500 Slips As Market Rotation Gains Steam
The S&P 500 (Index: SPX) slipped a little over 0.8% in the trading week ending Friday, 26 July 2024. The index closed out the week at 5,459.10. The index is 3.7% below its peak of 5,667.20 that it reached on 16 July 2024.
The market's decline coincided with the of the conveyance effect gaining steam, the mechanics of which are seen as a rotation from the megacap tech stocks that came to dominate the S&P 500 in the first half of 2024 into other component stocks of the index.
On net, we're seeing that negative changes in the market capitalization of megacap tech stocks that are being mostly offset by increases in stocks with lower market caps. In the past week, that worked out to a relatively small decline in the level of the index.
A level that remains consistent with the dividend futures-based model's projected trajectory for what the S&P 500's value would be as current day investors focus on the distant future quarter of 2025-Q2. The latest update of the alternative futures chart shows that state of affairs.
The market-moving news headlines for the week that was emphasize the ongoing rotation in the market prompted by the conveyance effect.
Monday, 22 July 2024
- Signs and portents for the U.S. economy:
- Fed minions thinking about when to start cutting U.S. interest rates:
- Much bigger stimulus developing in China:
- Nasdaq jumped, S&P and Dow also ended higher as Biden drops out of presidential race
Tuesday, 23 July 2024
- Signs and portents for the U.S. economy:
- Economists say Fed minions to deliver two rate cuts before end of 2024:
- Much bigger stimulus developing in China:
- JapanGov minions thinking about how to get more inflation:
- Nasdaq, S&P finish in the red as markets prepare for Big Tech quarterly results
Wednesday, 24 July 2024
- Signs and portents for the U.S. economy:
- Bigger trouble developing in China:
- BOJ minions signal they'll hike rates and reduce QE:
- Bigger trouble developing in Eurozone:
- Nasdaq sinks more than 3%, S&P slides on disappointing start of Mag 7 financial results
Thursday, 25 July 2024
- Signs and portents for the U.S. economy:
- Fed minions expected to start delivering rate cuts in September 2024:
- Much bigger stimulus, trouble developing in China:
- Bigger trouble developing in Eurozone:
- Nasdaq, S&P close lower in late-session selloff as aim for tech comeback loses steam
Friday, 26 July 2024
- Signs and portents for the U.S. economy:
- Expectations build for Fed minions to cut rates in September 2024:
- Bigger stimulus developing in China:
- Bigger trouble developing in Eurozone:
- Dow, S&P, surge as tech stocks advance, PCE data stoke rate-cut expectations
The CME Group's FedWatch Tool forecast is mostly unchanged again this week. The tool still anticipates the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% until 18 September (2024-Q3), at which time, the Fed is expected to start a series of 0.25% rate cuts that will occur at 6-to-12-week intervals at least into mid-2025.
The BEA's first official estimate of GDP in 2024-Q2 is +2.8%, which aligns with the Atlanta Fed's GDPNow tool's final forecast of +2.7% for this quarter. The GDPNow tool has shifted to project 2024-Q3's real GDP growth rate, which is starting with an estimate of +2.8% growth.
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